The price of Bitcoin (BTC) is nearing $11,000 once again after a shaky start to October. Last week BTC fell below $10,500 but on Oct. 9 the price swifty recovered to $10,940.
In the short term, there are three factors that could enhance bullish sentiment and push the price above $11,000. The possible catalysts are Square’s $50 million investment in Bitcoin, a prolonged accumulation phase, and the recent spike in on-chain activity.
BTC/USD daily chart. Source: TradingView.com
Square’s $50 million Bitcoin investment is symbolic
On Oct. 8, Square, an $81 billion payments conglomerate, announced that it had purchased $50 million worth of Bitcoin which represents 1% of the company’s total assets.
In an official statement, Square’s chief financial officer Amrita Ahuja said the Bitcoin investment is a step toward financial inclusion. Ahuja said:
“We believe that bitcoin has the potential to be a more ubiquitous currency in the future. As it grows in adoption, we intend to learn and participate in a disciplined way. For a company that is building products based on a more inclusive future, this investment is a step on that journey.”
A $50 million investment for a company the size of Square is not a major allocation but it does symbolize the rising institutional demand institutions have for Bitcoin as an investment vehicle and a store of value.
The announcement comes merely a month after MicroStrategy, a Nasdaq-listed billion-dollar firm, bought $425 million worth of Bitcoin.
Mohit Sorout, a partner at Bitazu Capital, pinpointed the positive market movement of Bitcoin despite negative events in early October. He noted:
“Fascinating how a myriad of extremely bad news didn’t move price but a measly $50m buy from SQ might just force a BTC breakout.”
A prolonged accumulation phase is materializing
Bitcoin has been ranging in between $10,500 and $11,000 for most of the past month. As Cointelegraph reported, when BTC’s volatility sharply drops in an extended period, it makes a large price movement likely.
The Bollinger Bands, an indicator which establishes the price range of an asset based on its volatility, have also narrowed significantly. The 30-day volatility is now at 20%, which historically was only hit 7 times in the past five years.
Various technical indicators indicate that an upsurge in volatility is probable after a prolonged range. It also raises the probability of an accumulation phase forming, given that BTC has protected the $10,500 support level.
BTC on-chain activity is rising
According to on-chain analyst Cole Garner, the number of daily active addresses has spiked in recent weeks.
Garner attributed it to a potential increase in demand from investors in China, after the state media’s positive crypto report.
Bitcoin hashrate. Source: glassnode
In addition to the Bitcoin blockchain network activity, the hashrate is continuously increasing to new highs. This suggests that miners are confident in the medium-term price trend of BTC. Researchers at glassnode further explained that:
“Bitcoin hash rate hits a new ATH and touches 170 exahash for the first time in history on the hourly chart (24h MA). That is an increase of around 40% since the halving in May, substantially adding to the security of the network.”
Title: 3 key indicators suggest Bitcoin price is preparing to retest $11,000
Sourced From: cointelegraph.com/news/3-key-indicators-suggest-bitcoin-price-is-preparing-to-retest-11-000
Published Date: Fri, 09 Oct 2020 07:34:50 +0100