Bitcoin -BTCUSD
The Bitcoin price is in the spotlight today. The BTC has jumped from this week’s low of $30,000 to $37,000, bringing its total market capitalization to more than $690 billion. Other altcoins like Ether, Cardano, and Binance Coin have also followed suit.
Why Bitcoin is focus: The BTC is in focus today for three main reasons. First, on Wednesday, El Salvador became the first country to make Bitcoin its legal tender. This is the primary reason why the price rose. However, there are concerns about how big this move is since El Salvador is a small country that has a GDP of just $27 billion.
Second, the Bitcoin price will be in the spotlight because of the upcoming US inflation data. The numbers will set the tone for the Federal Reserve at a time when some analysts are predicting hyperinflation in the United States.
Analysts see the headline and core CPIs rising to the highest levels in years. If they are accurate, the Fed could be pushed to start tightening faster than expected. If they miss, they will likely give the Fed cover to maintain its current policies.
Third, the BTC price will be watched closely after it emerged that JGB paid $11 million to hackers who attacked its network last week. This is in addition to the $4 billion that Colonial Pipeline paid to hackers. As such, there could be concerns about regulations as the government attempts to limit these ransom payments.
The daily chart shows that the BTC price has bounced back after it declined sharply on Tuesday. However, the price remains in the same range where it has been in the past few weeks. Also, it seems to be forming a bearish pennant pattern, which is usually not a good sign. It is also below the 25-day and 50-day moving averages.
Therefore, in my view, Bitcoin is not out of the woods yet, meaning that this relief rally could fade. If this happens, the price will likely drop below the support at 30,000. On the flip side, a move above the resistance level at $40,000 will mean that there are enough buyers to push it higher.
Follow Crispus on Twitter.
