The reasons for Bitcoin's rally that encourages bulls after January's crash
Bitcoin bulls finally won the day thanks to a closing of the first week of February above $42,000, that gives them ammunition to continue battling and extend the rises to the next level of resistance at $45,000. The upswing of the last four days has not lost steam and has erased the bad sensations of several weeks of falls, while the most optimistic are already looking at $60,000.
More than $10,000 now distances the price of the digital asset par excellence from its January 24th low of $33,000. The rises were contributed to, according to experts, by an increased appetite for risk and the close correlation that Satoshi Nakamoto's currency now exhibits with the New York Stock Exchange.
As we have seen in recent weeks, the cryptocurrency market is moving in high consonance with risk-on stocks, particularly tech-heavy Nasdaq stocks, as The Motley Fool's, Chris MacDonald, wrote. However, "the price action we are seeing among mega-cap stocks, with Amazon rising double digits after last week's results, for example, indicates that investors are overreacting to the news," he noted.
"Cryptocurrency traders turned optimistic after Amazon's better-than-expected earnings report, as did Google, Apple and Microsoft. Positive earnings from these companies helped reignite investors' risk appetite and helped boost cryptocurrency prices," explained Naeem Aslam, head of analytics at Avatrade.
Among the reasons cited by experts is also Friday's much better-than-expected US jobs data. And Bitcoin's inverse correlation with the dollar index, which this past week hit resistance above 97.00, to fall to almost 95.00, where this index, that measures the strength of the greenback against six rival currencies, stood in November, when Bitcoin set its all-time high.
As for news specific to the 'crypto' market, Bitcoin received a boost on Friday thanks to a report showing that Marathon Digital's mining activity increased its January output by more than 800% and it now has almost 8,600 Bitcoins on its balance sheet. The launch of Solana Pay and the listing of two Solana-based tokens on Coinbase earlier this week continue to provide the token with strong tailwinds. Ethereum is also seeing increased interest due to recent figures showing the proliferation of non-fungible tokens (NFTs). Ethereum is the main blockchain network on which most NFTs run.
Finally, it emerged that KPMG in Canada has completed an allocation of cryptoassets to its corporate treasury, the firm's first direct investment in digital currencies. The allocation includes Bitcoin and Ethereum.
REGULATION, A CATALYST FOR RISES
Likewise, the looming regulatory wave on digital currencies left some relevant events this past week. India shed clarity on whether or not it will ban e-currencies and after launching a specific legal and tax framework on tokens, the market now points to the fact that there will not be an absolute veto as there is in China.
Russia is also working on a regulation of its own, that distances the possibility of a ban in the country, and investors are also rushing into purchases encouraged by rumors that the US or the UK will take time to enlighten regulations. Although they are expected this year and work will start by February, at least in the US, they are not expected to be implemented until autumn.
This news revives bullish bets from firms such as Bloomberg Intelligence, which continue to bet on $100,000 as the target price for Bitcoin. In their February report they indicated that the most traded of the 'crypto' assets is now more likely to try for $60,000 rather than $30,000.