Bitcoin is drawing closer to the $40,000 mark, grabbing the attention of cryptocurrency speculators.
This interest peaks as the year concludes. The digital asset has seen remarkable growth, doubling its value in this chaotic year.
Over the past 11 months, the cryptocurrency’s value surged by 130%. This growth outshines traditional investments like stocks and gold.
Expectations are high for the Federal Reserve to reduce interest rates next year.
Simultaneously, there’s anticipation that the U.S. might approve Bitcoin spot exchange-traded funds (ETFs). These factors together have boosted Bitcoin’s value.
Despite regulatory challenges in the U.S., Bitcoin’s rise continues.
The U.S. authorities’ actions against figures like Sam Bankman-Fried and companies like Binance have not dampened market optimism.
Many see these regulatory efforts and the rising interest in ETFs as signs of the crypto sector’s maturing.
Fiona Cincotta, from City Index Ltd., believes Bitcoin’s path to $40,000 depends on the approval of a Bitcoin spot ETF.
The cryptocurrency recently experienced a slight dip in momentum. This change occurred as investors shifted their focus to fluctuating equities and foreign currencies.
Bloomberg Intelligence predicts U.S. approval for spot Bitcoin ETFs by January.
However, unexpected challenges to ETFs or shifts in interest rate bets could hinder Bitcoin’s progress.
Despite these potential obstacles, the market sentiment currently leans towards optimism.
MicroStrategy Inc., a major corporate Bitcoin holder, recently invested an additional $593 million in the cryptocurrency.
This investment brings their total holdings to about $6.5 billion.
Galaxy Digital Holdings Ltd.’s Michael Novogratz predicts Bitcoin could reach its 2021 peak of nearly $69,000 within a year.
Bitcoin recently reached a 19-month high before slowing its rise. Other cryptocurrencies like Ether also saw gains. These movements highlight Bitcoin’s current market trends.
A loss of momentum in Bitcoin’s rally?
The cryptocurrency’s weekly Relative Strength Index (RSI) recently exceeded 75.
While such a high RSI typically indicates an overbought condition, Bitcoin’s history tells a different story. In the past, a high RSI has often preceded further increases in value.
However, the Moving Average Convergence Divergence (MACD) study suggests a loss of momentum in Bitcoin’s rally.
The MACD shows a recent downward trend, casting doubt on Bitcoin’s ability to stay above $38,000 consistently.
Tony Sycamore from IG Australia Pty remarks on Bitcoin’s struggle to maintain a level above $38,000.
He remains optimistic about Bitcoin’s potential to exceed $40,000, possibly after an ETF announcement or as risk assets gain momentum.
The options market for Bitcoin indicates a December trading range between $37,000 and $40,000.
Traders are actively betting on these levels, suggesting that $40,000 will be a critical test for Bitcoin’s resurgence.