Bitcoin has become a tirelessly bullish asset.
The benchmark cryptocurrency logged yet another record high on Sunday, hitting $28,387 as traders/investors measured its strength against the US dollar, the global reserve currency that has plunged by more than 12 percent from its mid-March top. At least, that is the popular narrative so far.
But bulls failed to push the Bitcoin price towards its psychological upside target of $30,000. Some profit-taking ensued that caused the cryptocurrency to correct to as low as $25,772. But the intraday bearish bias was brief. Traders/investors flocked back into the Bitcoin market. The price rebounded back to reclaim its reliable support level of $27,000.
The Case for $30,000 Bitcoin
Bitcoin’s retracement on Monday prompted many analysts to see a bullish continuation scenario. Some pointed to an apprehensible upside technical structure—a Bull Pennant—brewing on the shorter-timeframe charts as the cryptocurrency consolidated sideways.
The technical setup projected $30,000 as its primary upside target, as shown in the chart below.
Nevertheless, some dissenting views also appeared forth. According to Michaël van de Poppe, an independent market analyst, Bitcoin looks poised to continue its downside correction primarily because of its “overbought” status. He stated that the cryptocurrency could fall to below $20,000 in the next major sell-off.
On the other hand, the fundamentals show an altogether bullish bias, promising that the Bitcoin price could be on its way towards $30,000 by the upcoming New Year’s eve. Here are three reasons why a continuation rally could happen.
#1 A Big Fat Stimulus Check
The US House of Representatives passed legislation on Monday to increase direct economic relief to millions of Americans after President Donald Trump’s unilateral demand.
The measure, which passed with a 275-134 vote in the Democratically-led Congress, proposed to change the stimulus checks amount from $600 to $2,000. It came a day after Mr. Trump signed the second COVID-19 relief bill on Sunday night, paving the way for a $900 billion aid to reach American households and businesses.
Bitcoin reacted optimistically to the stimulus news, very much in the line of its previous rally that followed the US government’s $2.3 trillion coronavirus aid announcement in April 2020. The cryptocurrency mainly retraced higher after Trump signed the bill, confirming that traders and investors treat the stimulus events as bullish.
Therefore, if the Republican-controlled Senate lets the amended bill go through with a winning vote, the stimulus package’s overall size would increase by extensive margins. That, in turn, would pressure the US dollar lower further, benefiting Bitcoin in the process.
#2 A $100M Investment for Bitcoin
As the stimulus expansion reaches an impasse, Bitcoin has found more reasons to grow its market cap — thanks to its ever-expanding institutional base.
Another Nasdaq-listed corporation joined the ranks of mainstream companies and investors that have invested in Bitcoin. Greenpro Capital, a Hong Kong-headquartered business intelligence firm, announced it would raise debts worth $100 million to buy Bitcoin, calling the cryptocurrency “a reliable future store of value.”
“I’ve instructed our investment bankers to raise debt in Q1, 2021 of up to US$100M to invest in $BTC,” confirmed CEO CK Lee, adding that Greenpro “will also invest its own cash into BTC.”
GREENPRO CAPITAL UP 133% IN PRE-MARKET; AFTER CO. ANNOUNCED THAT IT INTENDS TO SET UP A BITCOIN ($BTC) FUND FOR INVESTMENT
— First Squawk (@FirstSquawk) December 28, 2020
The news further attested to the theory that institutions would purchase Bitcoin even as it trades near its all-time highs. That could allow traders to spot potential accumulation zones to plan their medium-to-long-term bullish bias, creating an ideal setup for the price to claim the $30,000-level.
#3 Google Trends
Internet searches for the keyword ‘how to buy bitcoin’ attained a perfect score on a 12-month timeframe, suggesting that the cryptocurrency market now attracts more retail players.
The active Bitcoin wallets have increased by more than 100 percent in 2020.
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Author: Yashu Gola