The flagship cryptocurrency, Bitcoin has just broken through the $40,000 resistance zone to currently stand at $40,200, up 17.57% for the day, as of the time of writing this report.
What is causing the rally?
Bitcoin’s current bullish momentum is a result of a violent short squeeze occurring as prices broke above $35,000, and then suddenly accelerated by 11% from roughly $35,350 to $39,280 in less than three hours in the Asian session today. Cryptocurrency on-chain analyst, Willy Woo had earlier predicted that a short squeeze was coming in his newsletter that was posted on Friday. He explained that a short squeeze was very much in play using indicators such as the OTC Outflow RSI, ASOL (Average Spent Output Lifespan) and the UTXO realized price distribution to explain his points.
He however stated that in the short term, Bitcoin needs to clear $36.5K, $41-42K and then ultimately get above its 200-day moving average in other for him to confirm the continuation of the bull run. On his Twitter handle, he tweeted “And folks, we have our squeeze.”
Another reason for the bullish momentum could be the ₿ word conference where Elon Musk shilled (a person engaged in covert advertising for a cryptocurrency) Bitcoin touting that he, Tesla and SpaceX own Bitcoin and do not plan on selling any of their coins. He also stated that he believes Bitcoin is pivoting towards renewable energy and Tesla will most likely resume accepting Bitcoin as a means of payment.
As of the time of the conference, Bitcoin quickly recovered from trading below $30,000 to $32,000 on that day, representing an 8.75% gain. Jack Dorsey, the CEO of Square and Cathie Wood, the CEO of Ark Invest were also present at the event and only had good things to say about Bitcoin.
Also contributing is news that e-commerce giant, Amazon plans to start accepting cryptocurrency payments as the firm is looking to hire a Digital Currency and Blockchain Product Lead. This comes after news about an insider reporting to the London business newspaper called City A.M, that Amazon is planning to start accepting Bitcoin (BTC) payments by the end of 2021. This has made investors bullish on Bitcoin because according to the firm, each month, more than 197 million people around the world get on their devices and visit Amazon.com. A cryptocurrency payment could mean massive adoption of the asset class, worldwide.
Investors are advised to trade cautiously as cryptocurrencies are very volatile assets. The dollar-cost averaging method is advised to be used when investing in cryptocurrency assets.
The total cryptocurrency market capitalization currently stands at $1.55 trillion as of the time of writing this report.