Bitcoin Posts Comeback Rally on Elon Musk Comment; Analyst Sees ATH
Bitcoin prices raced towards $35,000 as European investors woke up to Elon Musk’s latest cryptocurrency endorsement.
The BTC/USD exchange rate rose as much as 4.8 percent during the Asian and early European session to hit an intraday high of $34,728. That followed a 2.63 percent jump last week that closed January at a 14.13 percent monthly profit.
Bitcoin attempts to break above its short-term trendline resistance. Source: BTCUSD on TradingView.com
Bitcoin attempts to break above its short-term trendline resistance. Source: BTCUSD on TradingView.comMusk Has Bitcoin
The jolt of recent retail interest came after Tesla and SpaceX founder Elon Musk—a high-profile tech celebrity in his own way—relaunched himself as a Bitcoin supporter. In an audio conference call with venture capitalist Andreessen Horowitz and other investors, Mr. Musk called the cryptocurrency “a good thing,” stating that it is standing on the “verge of getting broad acceptance by conventional finance.”
Mr. Musk’s comments followed his cryptic Twitter bio update on Friday in which he modified his introduction to just one word: Bitcoin.
That helped raise the cryptocurrency to its weekly high above $38,500 as many analysts noted that Mr. Musk would convert his companies’ cash reserves into Bitcoin. Nevertheless, it pared those gains entirely heading into the weekend, only to resume its upside move on Monday after Mr. Musk’s latest statement.
“The richest man in the world is a big fan! He must have a bag,” said Lark Davis, a crypto YouTuber, on Monday. “Elon Musk probably going to announce his bitcoin buy soon. The guy has to have a few hundred million worths by now!“
A super-dovish Federal Reserve, near-zero interest rates, unlimited bond-buying, and stimulus injections worth more than $3 trillion has prompted investors to pour their capital into the Bitcoin market in the last eleven months. Most of them, including corporate firms MicroStrategy and Square, see the cryptocurrency as a hedge against inflation.
Bitcoin prices raced towards $35,000 as European investors woke up to Elon Musk’s latest cryptocurrency endorsement.
The BTC/USD exchange rate rose as much as 4.8 percent during the Asian and early European session to hit an intraday high of $34,728. That followed a 2.63 percent jump last week that closed January at a 14.13 percent monthly profit.
Bitcoin attempts to break above its short-term trendline resistance. Source: BTCUSD on TradingView.com
Bitcoin attempts to break above its short-term trendline resistance. Source: BTCUSD on TradingView.comMusk Has Bitcoin
The jolt of recent retail interest came after Tesla and SpaceX founder Elon Musk—a high-profile tech celebrity in his own way—relaunched himself as a Bitcoin supporter. In an audio conference call with venture capitalist Andreessen Horowitz and other investors, Mr. Musk called the cryptocurrency “a good thing,” stating that it is standing on the “verge of getting broad acceptance by conventional finance.”
Mr. Musk’s comments followed his cryptic Twitter bio update on Friday in which he modified his introduction to just one word: Bitcoin.
That helped raise the cryptocurrency to its weekly high above $38,500 as many analysts noted that Mr. Musk would convert his companies’ cash reserves into Bitcoin. Nevertheless, it pared those gains entirely heading into the weekend, only to resume its upside move on Monday after Mr. Musk’s latest statement.
“The richest man in the world is a big fan! He must have a bag,” said Lark Davis, a crypto YouTuber, on Monday. “Elon Musk probably going to announce his bitcoin buy soon. The guy has to have a few hundred million worths by now!“
A super-dovish Federal Reserve, near-zero interest rates, unlimited bond-buying, and stimulus injections worth more than $3 trillion has prompted investors to pour their capital into the Bitcoin market in the last eleven months. Most of them, including corporate firms MicroStrategy and Square, see the cryptocurrency as a hedge against inflation.
US dollar index’s gains stand limited by concrete resistance areas. Source: DXY on TradingView.com
US dollar index's gains stand limited by concrete resistance areas. Source: DXY on TradingView.comTesla has $19 billion worth of cash reserves that may likely lose their dollar value should the Fed’s dovish program continue. That has raised the prospect that Mr. Musk may convert a portion—if not all—of its cash balances to Bitcoin.
All-Time High Ahead?
The latest push upward has improved Bitcoin’s prospects of recording another bull run to retest its record high near $42,000. For starters, the cryptocurrency is visibly attempting to break out from a Rising Wedge pattern. Its primary upside target is near $50,000.
Furthermore, Marc Principato, the executive director of Green Bridge Investing, sees a so-called Wave 5 brewing on the Bitcoin charts, anticipating that maintaining support above the $27,500-$30,000 area would push the price back past $40,000 in the coming sessions.
“Based on our specific rules, as long as the price fluctuates above 27.5K, our outlook will continue to be bullish, even within this smaller range bound structure,” the analyst wrote. “27.5K to 30K is a broader higher low area, and in the context of a bullish trend, higher lows often lead to higher highs.”
Bitcoin bullish setup highlighted by Marc Principato. Source: BTCUSD on TradingView.com
Bitcoin bullish setup highlighted by Marc Principato. Source: BTCUSD on TradingView.comDmytro Volkov, CTO of the international cryptocurrency exchange CEX.IO, matched the bullish sentiment by providing the details of their latest signup statistics. He noted that the number of new users on their exchange increased after Mr. Musk’s pro-Bitcoin update.
“This Friday we have experienced an anomalously high number of new registrations on CEX.IO. We saw a similar surge in early January, but there were half as many registrations then,” he told NewsBTC via email.
“Right now, the number of new user registrations is about 4 times higher than normal. Other exchanges are seeing similarly sharp increases in user numbers,” he added.
BLOCKCHAIN
Elon Musk: Bitcoin On”The Verge” Of Breaking Into Traditional Finance
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Elon Musk believes that Bitcoin is on the verge of breaking into the legacy financial system. Musk, who is the CEO of electric vehicle giant Tesla, stated in a recent interview that he sees more mainstream financial services integrating Bitcoin.
The 49-year-old, who is currently the richest person in the world, delved into Bitcoin and more in an interview on exclusive social media app Clubhouse. He revealed that he was introduced to Bitcoin in 2013 by his friends.
“Many friends of mine have been trying to convince me into Bitcoin for a long time. I should have bought some Bitcoin eight years ago. I do think Bitcoin is a good thing. I am a supporter of Bitcoin, I am late to the party, but a supporter,” he told the audience.
“I am late to the party but I am a supporter of Bitcoin.”
– Elon Musk— Peter McCormack (@PeterMcCormack) February 1, 2021
Musk, who is also the founder and CEO of SpaceX, believes the time has come for Bitcoin to upend the traditional financial system. His remarks come at a time when many institutional investors are increasingly getting into Bitcoin. Wall Street banks, including J.PMorgan, have also changed their anti-Bitcoin stance. Payment giants like PayPal have integrated the crypto as well.
“I think bitcoin is on the verge of getting broad acceptance by conventional finance people,” Musk told a packed Clubhouse chat room.
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BTCUSD Chart By TradingView
This isn’t the first time that Musk has touted the flagship cryptocurrency. He was credited with being behind a recent BTC price rally that sent it to over $35,000. This was after he changed his Twitter bio to “#bitcoin.” He then went on to tweet, “In retrospect, it was inevitable.” The crypto world was in a frenzy, speculating he was referring to Bitcoin. The price gained close to 15% within minutes following this.
Dogecoin to Become the Currency of Earth
In his Clubhouse interview, Musk also talked about Dogecoin, a crypto he loves. The meme-themed crypto has in the past few days been the subject of a Reddit-inspired pump that has seen it record a new all-time high. After a massive correction, it has regained its momentum, recording a 44% rise in the past 24 hours.
On Dogecoin, he stated, “I make jokes about Dogecoin, but they are just made to be jokes. Dogecoin was made to be a joke. But fate loves irony. The most ironic outcome is most likely.”
Dogecoin started out as a joke indeed between two software engineers. The two, Adobe’s Joseph Palmer and IBM’s Billy Markus then decided to work on the crypto after it received very high interest in its first few months.
He added, “The most entertaining and ironic outcome is that Dogecoin becomes the currency of earth in the future.”
BLOCKCHAIN
Why the Bitcoin price dropped immediately after Musk’s positive comments
The Bitcoin price pumped and fell immediately after Tesla CEO Elon Musk talked about BTC positively on Clubhouse.
Musk complimented Bitcoin, stating that it is ready for broader adoption. He said that he is “late to the party,” suggesting that he is now an enthusiast in the dominant cryptocurrency.
The 15-minute chart of Bitcoin. Source: BTCUSD on TradingView.com
So why did Bitcoin react with a drop?
On Sunday night, January 31, Elon Musk, the CEO of Tesla and SpaceX, appeared on the popular app Clubhouse to discuss various topics. During the conversation, Musk was asked about his thoughts on Bitcoin. He said:
“I do at this point think Bitcoin is a good thing. I am a supporter of Bitcoin. I am late to the party but a supporter. Bitcoin is on a verge of getting broad acceptance by traditional finance people.”
Yet, despite the positivity around BTC, the price of BTC saw a sharp drop from $34,400 to below $33,800 within minutes.
According to analysts at IntoTheBlock, BTC saw the largest deposit to centralized exchanges in over four months last Friday. This trend coincides with the short-term recovery of BTC from $32,200 to around $33,800.
Bitcoin price movement
Prior to the conversation, traders and analysts expected the price of BTC to move up in anticipation of it.
A pseudonymous cryptocurrency trader known as “Loma” said that Bitcoin was rising in anticipation of the Musk Ask Me Anything (AMA). He added:
“I’m not saying, you should go and long it or something. Just that if you’re bearish, you might have a better entry in a few hours. $BTC (and consequently the rest of the market) moving up right now in anticipation imo.”
Bitcoin enthusiasts were expecting Musk to mention BTC, after his Twitter bio change and his like on a DeFi-related Twitter post.
If Musk talks about Bitcoin on Clubhouse, analysts said that Bitcoin could see a Friday-esqe rally, when it surged 14% in two days.
But, there were several concerning on-chain indicators that signaled a weakening trend.
Neko, a semi-pseudonymous cryptocurrency trader, said that the premium on Coinbase was on the decline. This typically signals a drop in buyer demand from the U.S.
“BTC Coinbase Premium Index *The gap between Coinbase Pro price(USD pair) and Binance price(USDT pair) which indicates a strong spot buying pressure from Coinbase when the premium is high.* Current price exceeds the premium, which is a bit concerning vs last week.”
Due to the lackluster on-chain fundamentals, Bitcoin likely pulled back as soon as the highly anticipated event occurred, which included Musk talking about Bitcoin.