Bulls predict more gains for Bitcoin: How high can it go?

Highlight:

• Bitcoin touched levels of US$48,022.29 earlier in the day, its highest in the last 24 hours, according to CoinMarketCap.
• In the last one week, Bitcoin has rallied from levels of US$42K to US$48K.
• Bitcoin is now sitting on a YTD gain of around 2% as it ended the year 2021 at around US$46,200.

Bitcoin's rally over the last few days in which it moved past the US$48,000 mark and touched 2022's highest level has bulls eying levels above US$50K in the near future. At the time of drafting, the largest digital currency by market capitalisation was trading at US$47,110.41, down 0.66% in the last 24 hours, according to data available on CoinMarketCap. Earlier in the day, it touched levels of US$48,022.29, which was the highest in the last 24 hours.

Around this time last week, Bitcoin was hovering around the US$42,000 mark but over the weekend, the bellwether digital currency broke above its crucial resistance level of US$44,300, which led to further buying and it reached levels of US$48K. On a year to date (YTD) basis, Bitcoin is now sitting on a gain of around 2% as it ended the year 2021 at around US$46,200, as per data available on CoinMarketCap.

Also Read: Over 500% rise in 10 days: Green Metaverse Token's (GMT) wild run decoded

What has changed for Bitcoin fundamentally?

Till the recent rally, Bitcoin and other digital assets were stuck in a range as the US Federal Reserve and other central banks withdrew some of the stimulus announced earlier to support their economy to recover from the COVID-19 pandemic-led downturn. The excess cash (that was available due to stimulus measures) that was available earlier and was flowing to riskier assets like Bitcoin and other digital tokens, started getting withdrawn. What added fuel to the selloff in the digital token is the scrutiny by different governments following speculations that these assets could be used to skirt sanctions imposed on Russia.

But with clarity emerging from the regulatory front, Bitcoin bears rushed to cover their shorts, leading to the recent rally, say multiple technical analysts. Worth mentioning here is that U.S. Treasury Secretary Janet Yellen in an interview with CNBC on March 25 said despite her own skepticism, cryptos had benefits and "we recognize that innovation in the payment system can be a healthy thing".

According to social media speculations, the recent spike in Bitcoin could be because of a whale activity by the Luna Foundation Guard. The open-source organisation focused on the Terra blockchain said it planned to support the network's token by increasing its Bitcoin reserve to more than US$10 billion.

How long will Bitcoin rally continue?

According to various technical analysts, as Bitcoin has broken above its resistance level of US$44,300, the ongoing rally in the biggest digital coin will continue but with some intermediate correction. Bitcoin is now in the "overbought" zone, so a short-term pullback to its earlier resistance levels US$44,300, which could now act as a support, may happen before it tests levels of around US$55K.

Also Read: Ethereum Classic (ETC) up 50% in 3 days: What’s powering the crypto rally?

However, any surprise from the Russia-Ukraine war or the regulatory front could derail the recovery in Bitcoin.

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