After a sharp correction that lowered its price to nearly $30,000, Bitcoin is close to reclaiming $40,000. The leading cryptocurrency is currently trading at $39,764.04 as of press time but breached past $40,000 earlier this morning.
The revisiting of $40,000 came hours after BTC/USD entered and appeared to flip a crucial resistance zone to support at around $38,000.
Bitcoin is up over 14% in the past 24 hours, bottoming at $30,000 earlier this week before rebounding to $33,000 and eventually $40,000. It marks a fifth consecutive week in which the weekly candle has turned green.
With more capital pouring into Bitcoin, it is now outperforming altcoins from the lows. Ethereum, the second-largest cryptocurrency by market cap, is still holding its own, rising 7.2% over the past day to $1,160.
The rally in the Bitcoin price can be attributed to Grayscale Investments, the New York-based digital asset fund manager for institutional players, reopening its institutional trusts for the crypto markets. This signifies that the uptrend is being led by institutions, and not retail investors.
However, Bitcoin may not be out of the water just yet as some analysts believe it could face another correction. The trader that predicted Bitcoin’s bottom price in 2018 recently told his followers the ongoing rally seems corrective.
“ok, I’m out of #btc longs here now as well, this move up feels corrective, whether it be part of a larger consolidation or a B wave up before another nuke down to 28k I’m not sure, but I’m happy to take profit here and watch from the sides for a little while.”
Another popular analyst known by the alias “CRYPTO₿IRB” shared a similar sentiment. He tweeted on Jan. 11 that the “perfect Bitcoin correction scenario” would be a retest at $39,000-$40,000 before plunging to $26,000.
The Bitcoin technical analyst believes everything has gone according to plan, stating that BTC is “now in technical resistance area.”
He added that BTC currently “is in a no long zone” and that it’s “in the zone of overthrown reversal so longs are put at risk.”
Meanwhile, stablecoin deposits are flooding into cryptocurrency exchanges. This inflow may act as a short-term catalyst for Bitcoin as it suggests that sidelined capital is moving back into BTC.
This is often indicative of a bullish trend, and Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said an all-time high is likely for Bitcoin if it surpasses $38,000 again.
“Bitcoin didn’t change much. It flipped the $33,000 level for support and therefore is eager to test the $37,000-38,000 level. That one needs to flip. If it does, we’ll be eager for new all-time highs. If not, more consolidation likely.”
What also could propel the Bitcoin price into setting a new all-time high is the new stimulus coronavirus package that U.S. President-elect Joe Biden will announce when he takes office next week.