The Bitcoin price soared to the highest level since May as investors reflected on the decision by El Salvador’s government to buy 200 BTCs worth more than $10m. The BTC is trading at $52,458, which is significantly higher than the July low of about $30,000.
Why are Bitcoin prices rising?
There are three main reasons why the BTC price is in a major rally. First, investors are cheering the recent moves by El Salvador to accept BTC as a legal tender.
To match its words, the country’s government decided to buy BTC worth more than $10 million. This is a notable amount when you consider that the country has a relatively tiny GDP.
Second, Bitcoin is rising because of technical reasons. After dropping to a multi-month low of $30,000, investors believe that it reached an important bottom. They equate that price action to how the coin dropped to below $4,000 when the Covid-19 pandemic was starting.
Third, with Bitcoin currently in a new bullish wave, analysts believe that more institutional investors will move into the industry. Indeed, in a note, the multi-billion dollar German asset manager Union Investments, said that it was looking forward to invest in cryptocurrencies. At the same time, on-chain data shows that many whales are still holding their Bitcoin.
Bitcoin price prediction
A quick look at the daily chart shows that the BTC price is breaking barriers in the past few weeks. First, the coin moved above the first psychological level of $40,000 in August. Second, it rose above the key resistance level at $41,333,which was the highest level on June 16th. After that, it rose above $50,000 followed by $50,337. Along the way, the coin moved above the short and longer-term moving averages.
Therefore, the path of least resistance for the BTC price is to the upside. The key level to watch next will be the resistance at $55,000. However, a drop below the key support at $50,000 will invalidate this view.