Bitcoin and other cryptocurrencies experienced a significant surge on Monday, propelling the largest digital asset to a 20-month high. Over the past 24 hours, Bitcoin’s price escalated by 4%, reaching close to $41,400. This surge surpassed crucial milestones at $39,000, $40,000, and $41,000, marking Bitcoin’s highest point since April 2022 and prompting the question: could it go even higher?
Notably, Bitcoin has witnessed a considerable gain of more than 50% since mid-October, breaking free from a prolonged period of stagnation. The last time Bitcoin prices soared to such heights was just before the collapse of the Terra stablecoin network, triggering a harsh bear market.
Analysts are closely monitoring the surge, acknowledging that Bitcoin appears overbought on daily timeframes. However, experts, such as Alex Kuptsikevich, an analyst at broker FxPro, argue that this is not necessarily a signal for an impending correction. According to Kuptsikevich, the thin-air territory for Bitcoin extends up to $46,000, and price swings between $40,000 and $46,000 could be notably volatile.
Interestingly, Bitcoin has outperformed traditional financial benchmarks like the Dow Jones Industrial Average and S&P 500. The driving forces behind Bitcoin’s recent gains include growing optimism that regulators might soon approve the first spot Bitcoin exchange-traded fund (ETF). Experts believe this approval could usher in a fresh wave of investor interest in digital assets.
Additionally, increasing expectations of multiple interest rate cuts by the Federal Reserve in the coming year have contributed to Bitcoin’s rise. Lower interest rates generally favour riskier investments, such as Bitcoin and tech stocks, leading to a positive correlation between these assets.
As Bitcoin continues its upward trajectory, the pressing question is where it will go from here. Despite limited fundamental drivers beyond supply and demand, analysts argue that the rally may have more room to run.
From a technical market perspective, Bitcoin’s momentum exists in a range historically prone to volatility. While concerns of overbought conditions persist, trading data indicates that the volume remains relatively depressed, suggesting that there are still potential traders waiting to join the market.
A powerful trend in the crypto space is the Fear of Missing Out (FOMO). Analysts, including Kuptsikevich, believe that the first cryptocurrency can continue its movement for many more days, drawing in additional layers of investors succumbing to FOMO. With both retail and institutional traders seemingly on the sidelines, the recent gains could entice more participants to enter the market.
The current rally has left many interested parties on the sidelines, waiting for an opportune moment to join the market. Long-term holders who haven’t been willing to sell their Bitcoin contribute to the tight supply dynamics. As demand potentially increases and the supply remains constrained, there is speculation that Bitcoin prices could ascend even higher.
Alex Thorn, Head of Research at crypto financial services firm Galaxy Digital, emphasizes that despite the recent surge, Bitcoin remains very constructive. This sentiment suggests that the market may still have untapped potential, and the ongoing rally might attract a broader spectrum of investors in the days to come.
Bitcoin’s surge to a 20-month high has caught the attention of market participants and analysts alike. While acknowledging potential overbought conditions, the prevailing sentiment suggests that Bitcoin’s momentum may persist, driven by regulatory developments, macroeconomic factors, and the psychological dynamics of FOMO. The trajectory of Bitcoin thus remains a focal point for investors and enthusiasts with the question on the minds of many remaining: will Bitcoin scale even greater heights?
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