BTC-USD prices crossed $50K for the first time in a month, as bulls grapple for control. Following this recent bounce, Bitcoin has now become the best-performing asset this year.
The Fundamental Look
The price of the world’s largest cryptocurrency by market capitalization crossed $50,000 for the first time in a month on October 5th. Amidst heavy price volatility and FUD, Bitcoin (BTC) has made a triumphant return, cementing itself as the best performing asset of 2021. As of the latest reports, BTC is outpacing commodity returns by at least 13% for the year and 17% ahead of U.S.-listed micro-cap companies.
Several factors, such as macro uncertainty and the return of institutional investors, compounded by a flash social media outage that impacted Facebook (FB), Instagram, and other platforms, have played critical roles in helping BTC prices break back above the $50K psychological level. The overall cryptocurrency market cap now stands at $2.229 trillion, with Bitcoin’s dominance rate at around 43.75%.
In what comes as promising news for crypto enthusiasts, Securities and exchange Commission Chair Gary Gensler has clarified the the U.S. won’t follow China’s stance in banning cryptocurrencies. Mirroring Federal Reserve Chairman Jerome Powell, Gensler reiterated that although the SEC intends to implement investor and consumer protection rules, tax laws, and AML regulations, there is no intent to implement a China-like cryptocurrency prohibition.
In mining news, Bitcoin mining profitability is up 275% since before the May 2020 halving, as mining operations tread the path towards full recovery, following back-to-back disruptions this year. As Glassnode indicated in its report on on-chain analytics, Bitcoin’s hash rate has essentially recovered. Mining profitability currently stands at $40 million, increasing 275%, compared with the lows of between $6 and $8 million in June 2020.
Meanwhile, Canadian Bitcoin mining firm Link Global Technologies has been slapped with a $5.6M penalty for operating unauthorized power plants in the province of Alberta.
Finally, in terms of adoption, El Salvador continues to push bitcoin adoption by offering new incentives for using the Chivo wallet. Per the latest announcement by President Bukele, anyone using the government-backed wallet to pay for petrol in the country will receive a $0.20 discount per gallon.
Additionally, Verifone has partnered with Bitpay to enable thousands of merchants across the U.S. to accept bitcoin payments.
Whales of the Week
- September 30: 4,000.000 BTC moved between unknown wallets
- September 30: 15,000.000 BTC moved from multiple addresses to an unknown wallet
- October 1: 7,749.996 BTC moved from multiple addresses to an unknown wallet
- October 2: 6,286.079 BTC moved from multiple addresses to an unknown wallet
- October 2: 5,114.810 BTC moved from multiple addresses to an unknown wallet
- October 4: 15,000.002 BTC moved from multiple addresses to an unknown wallet
- October 5: 5,106.811 BTC moved from multiple addresses to an unknown wallet
- October 5: 5,086.811 BTC moved from multiple addresses to an unknown wallet
The Technical Take
After its weak performance during September, the BTC-USD pair has been on tear higher since the outset of October, rallying 16.94% week-over-week. The significant move higher has outperformed gains in Bitcoin’s closest peers, with ETH-USD adding 12.49% and ADA-USD rising a modest 2.35% over the same period.
Although average trading volume was relatively steady in the pair, Bitcoin’s sharp rebound in prices has seen the Relative Strength Index inch ever closer to overbought territory. Together with the Stochastic Oscillator trending at levels near 100, these momentum indicators suggest that a potential pullback lies ahead before a resumption of the near-term upward trend.
With the rebound in play, the next significant level to watch on the upside is the September high, just shy of $53,000. Any break above this level could be the catalyst BTC-USD needs to retest $60,000 and above.
In the meantime, the key levels to watch on the upside, besides for the 0.0% Fibonacci level, include resistance at $52,375 and $53,600. On the downside, support sitting at $50,250 and $49,900 could be critical levels during any pronounced pullback.
In addition, the pair is trending above the 50-day moving average, which has previously been at a level where Bitcoin has experienced renewed buying pressure on retreats, suggesting it will continue to be a source of support over the short term.
Disclosure: At the time of publication, Reuben Jackson did not have a position in any of the securities mentioned in this article.
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