Bitcoin back in business as investors look for bargain buying

Bitcoin on Monday crossed the $50,000 level again, hitting more than three-month high as investors piled back into the cryptocurrency on bargain-buying.

Analysts expect that the rally will continue and the digital currency could hit $60,000 in the medium term due to recent surge in adoption of cryptocurrencies globally. On the downside, the $40,000 support level is seen as critical for the cryptocurrency.

According to coinmarketcap.com, Bitcoin was trading at $50,245.45, up 2.65 per cent at 5pm UAE time.

“Bitcoin’s fire sale is over now and 86 per cent of the digital currency holders are in profit with the price being where it is now. However, the current bull run has only started, and this means we could see Bitcoin beyond the current all-time high,” said Naeem Aslam, chief market analyst at London-based AVA Trade.

Aslam projects Bitcoin could hit $60,000 in the medium term and $150,000 in the long-term period.

“A rise in the adoption of cryptocurrencies is a major reason for the recent surge in prices. Crypto adoption has jumped a whopping 881 per cent over the past year,” he said.

Similarly, the total market capitalisation of digital currencies was $2.17 trillion on Monday. The rise in market cap has been supported by a boost of 18 per cent in the price of Cardano and a gain of 11 per cent in the Binance coin. Dogecoin and Solana also increased by nine per cent and 73 per cent, respectively, during the same period.

With the current gains, Bitcoin has recovered more than 50 per cent of its losses that was seen during May when Bitcoin fell by over 40 per cent. Now crypto rally has reached for the third consecutive month.

“One of the primary reasons for the current upswing is that the global crypto adoption has been increasing over the last many months. Another factor that has been bullish for Bitcoin has been the recovery in BTC mining hash rates which had previously fallen owing to the Chinese mining ban. Most of the top Chinese miners now have shifted base to other locations including the USA,” said Vijay Valecha, chief investment officer at Century Financial.

“For the remainder of 2021, Bitcoin is likely to witness further investor attraction amongst the global audiences. This is as the crypto has broken above the $ 50,000 level, generating enough enthusiasm amongst the crypto traders. Cryptos continue to be a risk asset and as long as Fed & ECB strike a dovish tone with the markets, their existing price trends are likely to enjoy a strong leg of support,” he added.

For Bitcoin, according to Valecha, the next target is seen in the $57,000 to $59,000 zone with the crypto currently trying to fill the gap on the weekly charts. Thereafter, the next target lies near its previous all-time high of $ 64,800. A break above these levels could further trigger panic buying amongst the crypto bulls,” he said, adding that on the downside, the immediate support zone of $38,000-40,000 would be crucial to watch out for.

— waheedabbas@khaleejtimes.com