Now that Elon Musk seems have finished tweeting about bitcoin, the overall movement that is pushing the cryptocurrency higher is taking hold again.
Musk’s latest tweet showed “#Bitcoin” with a broken heart emoji and a reference to a lyric from the popular song “In the End” by Linkin Park: “I tried so hard and got so far; but in the end it doesn’t even matter; I had to fall to lose it all; But in the end it doesn’t even matter.”
Now the whole cryptocurrency industry fervently hopes that Musk will find some other form of amusement – they wish he’d never heard of bitcoin.
And bitcoin was on the rise again, up 13 per cent to $37,176.44 early Thursday morning from the day before, dropping slightly to $35,700 on Saturday. Wednesday’s bump came from the Central American nation of El Salvador which decided to make it legal currency. The original cryptocurrency hit an all-time high in February at $65,000.
“Prices can now be shown in bitcoin, tax contributions can be paid with the digital currency, and exchanges in bitcoin will not be subject to capital gains tax,” the law says.
While this is an extraordinary development, there are more conventional forces driving bitcoin higher again, and many
“More significantly, there has been continued accrual of bitcoin by bigger institutional wallets and Michael Saylor’s Microstrategy has increased the size of its current junk bond offering to $500m for the sole purpose of buying more BTC at these levels. These will have more impact on macro hedge funds who will look to take advantage of the pullback opportunity,” comments Stephen Kelso, head of markets at ITI Capital in a note.
“We may see a series of announcements of bitcoin purchases from institutions like Facebook soon,” Ki Young Ju, CEO of the blockchain analytics firm CryptoQuant, tweeted. “Institutions have been accumulating bitcoin in the $48,000 to $60,000 range since February.”
For analyst Mike McGlone, senior commodity strategist at Bloomberg Intelligence, the logic is similar. McGlone sees bitcoin as having hit bottom, and, following a well-established pattern, will soon head higher.
“Bitcoin Capitulation? $40,000 Appears More Likely Than $20,000,” he wrote.
“The June 8 Bitcoin plunge and revisit of lower-end-range support around $30,000 had many of the earmarks of extreme bearish sentiment typical of more enduring bull-market bottoms.”
CTO of Bitfinex, Paolo Ardoino told Bitcoin.com News that the current pause is no surprise to him.
“This current market pause is not unexpected,” Ardoino detailed. “Everyone needs time to assess and digest what the community has built. We’re waiting for a new momentum to gather as we continue to build upon the foundations created by some of the greatest minds in fintech. I’m still extremely bullish in the long term about bitcoin and the long-term fundamentals and use cases of the technology.”
Analysts do point out, however, that bitcoin will be tested at the $40,000 resistance level.
Says Élie Le Rest, partner at digital asset management firm ExoAlpha: “Traders still have some doubts on where the market is heading, so leverage has remained relatively low as forced liquidations have been painful since May. Breaking $40,000 could give the boost in traders confidence to leverage again their book to power new highs of the crypto market.”
Anthony Scaramucci, founder of Skybridge Capital, agrees that this bitcoin decline follows an established pattern.
“The bull market is intact for bitcoin. If you go back over the different slides in bitcoin over the last 12 years, this is consistent with those slides. Having said that, you had a very big run-up at the beginning of the year because of all the expectation but … most of the smaller players are using tremendous amounts of leverage. Think of the GameStop situation. … So long term, bitcoin is bouncing back, I think that’s a flight to quality in the crypto space but if you look at the altcoins I think it’s good for crypto and ethereum because they really got blasted.”
And despite bitcoin’s price correction in recent months from the all-time high near $65,000 reached in April, signs continue to mount of growing demand for cryptocurrencies from institutional buyers and brokerage firms writes Victory Capital, a Texas-based money manager, which said it plans to enter the crypto market through a private fund for accredited investors that will track the Nasdaq Crypto Index.
David Rubenstein, co-founder and co-executive chairman of The Carlyle Group, also remains bullish.
“I think it’s here to stay. Cryptocurrency is not going away, just like gold is not going away. Yes, it’s had its ups and downs and [Wednesday] was not a good day for it but that’s true of anything that is relatively new. … It’s here because people in the market want something other than just the traditional currencies that we’ve had and whether that’s right or wrong, it’s clearly something that the market wants.”
Technical analysis, which looks only at price movements, also shows that bitcoin has hit a ‘floor’ at about $30,000, and is bouncing back from that point.
“The last three days of candles have formed a perfect morning start reversal pattern. This could be the first indication that bitcoin is attempting to rebound and set a temporary bottom following the severe decrease since mid-May, which resulted in a 50 per cent loss,” writes analyst Yaz Sheikh.