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Bitcoin’s return to $40,000: possible reasons
- After rumors about Amazon’s (Nasdaq:) interest in cryptocurrencies surged, users began to suffer from FOMO.
- The price of Bitcoin rose by 15% within a few hours, indicating a “short squeeze.”
- Elon Musk has proven that Bitcoin has value, even though he has been funny on Twitter and the media before
After more than six weeks of trading between the two price extremes, Bitcoin has risen to the level of $40,000. In addition, as the Fear and Greed Index reached 32 points out of 100, cryptocurrency sentiment improved briefly, and as the price of Bitcoin rose by 15%, the idea of FOMO (fear of missing out) began to spread among retail investors. Nevertheless, due to China’s crackdown on cryptocurrency and the mining industry, the price of Bitcoin has not been seriously affected since the digression.
Every news is helpful
Bitcoin volatility is not restricted by “US macroeconomic news”; however, according to a study by the American Institute of Economics, scalability news matches Bitcoin’s price movements. Therefore, the cryptocurrency market is a slave to its own influence. As Nikolaos A. Kyriazis said, negative Bitcoin information has a greater impact on Bitcoin prices than any optimistic news.
Although the impact of negative news and positive news on Bitcoin is not balanced, the current case shows the extent of the news on Bitcoin. Amazon’s attempt to increase its exposure to cryptocurrencies through its “digital assets” job postings briefly stimulated investor interest. However, the rumors that Amazon will start accepting Bitcoin and other cryptocurrencies have been debunked and confirmed that Amazon will start developing their digital currency, which is the main catalyst for the good news.
As Crypto Banter emphasized, as Amazon continues to scorn global payment providers such as Visa (NYSE:) or Mastercard (NYSE:), the rumor has a more profound impact. Indeed, Amazon’s view of cryptocurrency will make the most of its use cases by eliminating middlemen. In doing so, Amazon will increase its profit margins. However, an Amazon spokesperson dismissed any market rumors, saying that “the speculation surrounding our specific plans for cryptocurrencies is incorrect.”
Elon Musk boosts positive momentum
Elon Musk’s influence on the crypto market made him the “most hated” person in the crypto “award”. However, his recent invasion and discussion of Bitcoin has helped fuel the positive momentum of the currency. At the B-Word conference, Musk emphasized that he, Tesla (NASDAQ:) and SpaceX own Bitcoin, and once mining becomes more dependent on green energy, Tesla will resume accepting Bitcoin.
In addition, the $1.5 billion in bitcoins Tesla purchased from the first quarter remains intact on the company’s balance sheet. Therefore, their earnings for the second quarter showed that they suffered a $23 million impairment due to the price of Bitcoin. Nonetheless, as the report suggests, Tesla’s revenue quadrupled in the first quarter, and when prices soared, they dumped some bitcoins.
on the other hand
- Bitcoin’s current price movement is similar to the previous bull market cycle, which may help predict the price in the coming weeks.
- Bitcoin’s failure to hold above the $40,000 mark indicates that this is just a longer short hunt.
- As investors withdrew 28 million U.S. dollars, the outflow of cryptocurrency investment continued to surge, of which the total outflow of Bitcoin was 24 million U.S. dollars.
Tether shorts
Cumulative news about cryptocurrencies pushed Bitcoin to its previous resistance level. CNBC analyst Jim Cramer said that with the surge in news surrounding Tether and Amazon, Bitcoin “feels like being shorted”. In addition, Glassnode confirmed the short report because the extent of the jump was attributed to over-leveraged positions.
In addition, Bloomberg reported that Tether may face formal allegations of bank fraud, which gave the Bitcoin market confidence because it contradicted the USDT standard. Nevertheless, Humphrey Young emphasized that Bitcoin is still an unstable asset. Despite the current surge, investors should not change their strategy after the sudden price increase.
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