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
Musk 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
Tesla 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
Dmytro 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.