The crypto market cap has reached $2,352 trillion as Bitcoin price spiked to a multi-month high of $52,000. So, Bitcoin has hit the highest price point since Elon Musk’s about-face on payments.
BTC/USD 4=hour chart | Source: TradingView
Three reasons why Bitcoin price is rallying close to $52,000
After dipping below $50,000 again, as AZCoin News reported, Bitcoin has continued to fall and surged to new multi-month highs above $52,000. The past few days have gone well for BTC as the asset has recovered from its mid-week drop below $47,000. It challenged $50,000 a few times, and after the last time, it even hit a high of $51,000.
This upside is relatively short-term as the bears do not allow it to continue moving forward. Over the next few days, BTC dropped below the coveted $50,000 and dropped to just over $49,000. However, the situation has changed again in the last 24 hours. Within hours, BTC gained around $2,000 in value. This resulted in briefly exceeding $52,000, becoming the new high since the mid-May correction.
First, according to Santiment, one of the factors triggering this rally is the increased interest in altcoins that has also been growing recently, some of them outperforming the leading cryptocurrency.
Source: Santiment
One of the coins that have surpassed Bitcoin is the second-largest cryptocurrency – Ethereum. On September 4th, ETH briefly peaked at $4,000, hit a 3-month high, and then fixed in the $3,900 region. Since the start of the year, Ethereum has shown around 312% growth to the all-time high of $4,362 it hit on May 12. Meanwhile, Bitcoin is up about 121% since January to an all-time high of $64,863 reached on April 14. However, for now, Bitcoin is still almost 20% below its all-time high.
The second reason is that at the moment, cryptocurrency whales on the Bitfinex exchange are not opening a large number of short positions. By adding around $80 billion per day, the crypto market capitalization has also hit a multi-month record at $2,352 trillion.
Plus, crypto whales were massively opening shorts as the leading cryptocurrency surges from $33,000 to $40,000 as if they expected BTC to dump after hitting resistance at $40,000. After Bitcoin dropped to $29,000, the whales started closing all of their short positions, hoping the price wouldn’t fall any further. Only a tiny amount of shorts were opened as Bitcoin was rallying above $51,000.
“Bitcoin is bullish when Bitfinex whales don’t stack up shorts. This can be divided into three waves. The second wave consisted of two parts when BTC rallied from 33k to 40k Bitfinex whales placed shorts. This means they were expecting a drop at key resistance of 40k. They retried (part 2) to see if BTC would close below 30k, but it did not happen Third wave: When BTC reached 29k, they were almost closing all their shorts! Which meant no further drop is expected; they were right. Since then, no huge amount of shorts were placed again, and BTC rallied to 50k”, CryptoQuant stated.
Source: CryptoQuant
And finally, according to the U.S. Labor Department, employers had provided only 235,000 jobs versus 725,000 expected. This means that the Fed Reserve is unlikely to withdraw its tapering initiative and will continue to drop helicopter money on the US economy. US stimulus programs already pushed Bitcoin up back in 2020, and their continuation keeps fueling the Bitcoin rally now.
Elon Musk’s u-turn fails to put brakes on Bitcoin’s bull run
Thus, Bitcoin closed above $52,000 after convincingly breaking through the $51,000 resistance. BTC had hit its highest level since May 12, when Tesla CEO Elon Musk infamously announced that the e-car maker had suspended Bitcoin payments due to environmental concerns.
BTC’s price action has been volatile throughout June. On June 22, Bitcoin hit a local bottom of $28,567. Things turned bullish in early July. Bitcoin scored ten consecutive green candles between July 21 and July 30.
Now that Bitcoin has crossed the $51,000 level, it remains unclear whether the bulls will manage to convert the previous resistance into support.
While it is tempting for Bitcoin holders to assume that Elon Musk is becoming irrelevant in the crypto community, he may be partly responsible for the ongoing recovery. Coincidentally, the largest cryptocurrency started its bullish streak on July 21, and the day Musk reaffirmed his support at the “The B Word” conference.
As AZCoin News reported, Musk said he has no interest in dumping Bitcoin, claiming that he wants the cryptocurrency to succeed:
“If the price of Bitcoin goes down, I lose money,” said Musk. “I might pump, but I don’t dump. I do not believe in getting the price high and selling it or anything like that.”
He also commented that Tesla was most likely to resume accepting Bitcoin.
Read more:
- Bitcoin Price Broke Above The $51,700 But Lack Of Buying At Higher Levels
- Crypto Is Far From Being A Bubble, Can Bitcoin Replace Gold?