Bitcoin is jumping to its highest level in six weeks on Monday, with some investors attributing the rise to speculation that Amazon may venture into digital currencies. News has intensified in recent days around Amazon's possible plans for cryptocurrencies and related technologies after the online retail giant posted a job opening for a digital currency and blockchain expert.
In addition, last week Elon Musk claimed that his space company SpaceX holds Bitcoins, as Tesla already does. He claimed that his concerns about the environmental cost of cryptocurrency were lessened by China's tougher laws against miners.
According to him, these businesses that are essential to the operation of the network but consume a lot of electricity will relocate to areas where energy comes from less polluting sources.
In addition, the rise was also fuelled by the liquidation of about $900 million of “short” positions overnight, so an initial moderate upward movement pushed investors betting on a decline to liquidate their position, thus intensifying the rise of the asset.
From a technical perspective, BTCUSD is heading towards the key $42,800 level. As a reminder, the market has been in a range for several weeks. Prices are still locked between the two range bounds located at $40,800 and $30,000. Thus, the break of one of the two bounds should set the tempo for the rest.
Bitcoin is still in an accumulation phase. However, the return of buyers and the interest of tech giants combined with increased volumes suggest a resumption of a possible bull run. Of course, it is necessary to have a confirmation of the recent upturn with the crossing of $40,800 in the coming days. Thereafter, we could see a U-shaped upturn towards $44,850 and then $50,500.
(Chart Source: Tradingview 26.07.2021)
However, we should not rule out a scenario where Bitcoin is once again held in check below the upper bound of its range. This could create a new price rotation (trading range) towards $32,650. To summarize, investors who have positioned themselves at the bottom of the range will pull up their stops and wait for major resistance to approach. The others will be watching the market's reaction to $40,800 to initiate buy (if broken) or sell (trading range) positions.
Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.
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