Bitcoin Breaks Through $40,000 To Reach 3-Week High
Bitcoin prices have enjoyed some compelling upside lately, surpassing the $40,000 level earlier this morning and then extending those gains.
The world’s most prominent digital currency reached as much as $41,046.77 around 10:30 a.m. EDT, according to CoinDesk.
At this point, the cryptocurrency was trading at its highest since May 21, additional CoinDesk figures reveal.
The price of bitcoin has rallied lately after a month where the digital asset’s price has repeatedly tested the $30,000 level.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Pankaj Balani, cofounder & CEO of Delta Exchange, spoke to this situation.
“Bitcoin has bounced sharply after testing the low thirty thousands zone a few times in the last three weeks,” he stated.
“The selling seemed to have exhausted and at the same time we had a number of positive triggers such as fresh buying by MicroStrategy, El Salvador accepting BTC as legal tender and positive comments by Paul Tudor Jones and Elon Musk.”
The most recent of these developments included Musk stating on Twitter yesterday that “Tesla will resume allowing Bitcoin transactions” “When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend.”
Today, hedge fund manager Paul Tudor Jones talked up bitcoin when appearing on CNBC’s “Squawk Box,” stating that:
“I like bitcoin as a portfolio diversifier. Everybody asks me what should I do with my bitcoin? The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities.”
In addition to describing the digital currency as a “great diversifier,” he emphasized that it could help him safeguard his “wealth over time.”
Julius de Kempenaer, senior technical analyst at StockCharts.com, also weighed in on these recent developments, indicating:
“The statement that BTC rose on the back of Elon Musk and Paul Tudor Jones comments sounds accurate. Whether that is a smart thing to do or to react on remains to be seen.”
“For now BTC is trading off its recent lows.”
Key Technical Levels
In addition to this more news-based commentary, de Kempenaer, as well as other market observers, offered some technical analysis.
While bitcoin rose above $40,000 for the first time since May, de Kempenaer described that price point as being more of a “psychological” “level than anything else.”
“The ‘real’ test comes at resistance around $42k-42.5k where the Jan 2021 peak and the late Feb 2021 low are located,” he stated.
Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All Streets Podcast, offered a similar point of view.
“As a technical analyst, I do not view 40K as a meaningful level for Bitcoin, although it is always encouraging to break psychological levels at round numbers,” he stated.
“Most traders are watching the 42K area closely, as this was the level where the initial move from the 2017 highs found resistance,” added Melker.
“It took a 1.5B Bitcoin purchase by Tesla to eventually break through that level. Having lost that level as support on the recent correction, this is the key area to watch.”
Mark Warner, head of trading at BCB Group, also singled out the $42,000 level, describing it as “the next resistance to overcome.” After that, the key level will be $46,000, he stated.
While several analysts spoke to the fundamental factors that drove bitcoin’s recent gains and commented on the key technical levels the digital asset faces going forward, Mike McGlone, commodity strategist for Bloomberg Intelligence, offered a positive outlook for the cryptocurrency.
“I see a fundamentally and technically strong bull-market,” he stated, noting that “demand is on the rise and supply is declining in the midst of early days of widespread adoption.”
McGlone also spoke to the prospect of U.S. regulators approving bitcoin exchange-traded funds (ETFs). While this development that has not yet materialized, he described it as inevitable.
“A key dangling carrot of bullishness is the advent of U.S. ETFs, which I see as a matter of time (on the back of the rest of the world, Canada and Europe) and a market that has provided a decent discount for the risks of further ETF approval delays.”
In other words, bitcoin is currently undervalued for a number of reasons, including falling supply, rising demand and U.S. ETF approval that he considers certain in the long-term.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.Source