Bitcoin prices have enjoyed a healthy recovery, rallying close to 20% after falling to almost $30,000 yesterday.
The world’s most valuable digital currency by market value rose to $36,957.52 earlier today, CoinDesk data shows.
At this point, it had climbed roughly 19% from the price of $31,035.49 it reached yesterday, its lowest since May 19, additional CoinDesk figures reveal.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
When explaining the digital currency’s latest price movements, analysts cited several developments, ranging from the latest signs of rising adoption to the cryptocurrency markets becoming oversold recently.
“The Bitcoin correction is likely over,” said Mike McGlone, commodity strategist for Bloomberg Intelligence, adding that “the market is at a discount.”
“I expect $30,000 support to hold on the way toward $100,000 resistance,” he said, offering some technical analysis.
Charlie Silver, CEO of Permission.io, offered similar input, stating that:
“Support seems clearly established at 30k for BTC but it may be tested a couple of more times.”
“If it holds I believe we will see new highs by the end of the year.”
In addition to providing technical analysis, McGlone described the “fundamental underpinnings” of bitcoin as “strong,” pointing to factors like bitcoin’s hard cap of 21 million units at a time when central banks have a potentially unlimited ability to print money.
Silver also commented on widespread global money printing, emphasizing that the U.S. has put trillions of dollars into circulation over roughly the last 18 months.
While he described the world’s largest economy as “leading the way,” he stated that “most countries around the world have had equal participation” in this activity.
The subject of money printing has become a hot topic in recent years, as central banks around the world have issued new units of fiat currency in order to help prop up economies struggling with the effects of the global pandemic.
While this development has helped fuel concerns for many market observers, it has been perceived as a boon for cryptocurrencies whose supply is capped.
In addition to highlighting the impact that this aggressive monetary policy could have on cryptocurrencies, analysts also spoke to the latest news out of El Salvador, where the nation’s lawmakers recently passed a bill making bitcoin legal tender.
“With El Salvador’s recent announcement, this is definitely a monumental moment, and it will continue to validate bitcoin and other cryptocurrencies and further stabilize prices after a volatile couple of weeks,” claimed Silver.
Nick Mancini, research analyst at crypto sentiment data provider Trade The Chain, also commented on this latest sign of adoption, as well as the anxiety surrounding the potential for sharp increases in the price level.
“We agree that both inflation concerns and the El Salvador Bitcoin adoption news were a great one-two punch of positive sentiment for Bitcoin,” he stated.
“Traders’ outlook on Bitcoin started picking up around 1am ET, which was when the El Salvadorian news broke,” said Mancini, citing proprietary data from Trade The Chain.
“Bitcoin price and sentiment are currently spiking in line with each other, and we expect that trend to continue.”
Several analysts offered a positive outlook for bitcoin, citing variables ranging from market factors to expectations of rising adoption.
“We can see below that Bitcoin hit oversold and has been forming a bullish RSI divergence – a highly bullish indicator – which happens when price and the RSI indicator diverge in a specific direction,” said Mancini, highlighting a technical indicator called the Relative Strength Index, which helps measure the extent to which a particular asset is overbought or oversold.
“We believe Bitcoin may recharge around $35,000, but as long as sentiment remains bullish, derivatives interest increases, and order book interest continues to pile in around $35,000, BTC should continue to head higher,” he stated.
Silver offered a more long-term perspective, which focused on the growing use of the world’s most prominent digital currency.
“Bitcoin is really serving as a store of value,” he emphasized.
“I think the next big wave we’re going to start seeing is sovereign nations reporting how much bitcoin they have in their treasuries,” said Silver.
“U.S. dollars and U.S. treasury bills have always been the sovereign store of value along with gold.”
“I think bitcoin is going to start replacing U.S. treasuries and dollars when countries like Ecuador, Colombia, the Philippines, start reporting” what they have in their treasuries.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.