Cryptocurrencies: In the heat of summer, why the price of bitcoin suddenly jumped?

The tech giants’ renewed interest in bitcoin gave the cryptocurrency market a boost on Monday, after weeks of slippage

Tesla, Twitter and maybe even Amazon: The tech giants’ renewed interest in bitcoin gave the cryptocurrency market a boost on Monday, July 26, after several weeks of slippage.

During Asian trading, the price of bitcoin jumped nearly 15% in less than an hour and a half, to reach $ 39,681, a high since mid-June. At around 10:50 a.m. GMT (12:50 p.m. in Paris), bitcoin was worth $ 38,460 (+ 11.5%). No information to date explained the rise, which analysts attributed instead to a series of positive news in recent days.

On Wednesday, US investment fund Ark Invest hosted the “B word,” an event to promote the institutional use of bitcoin. In an online chat, Cathie Wood, boss of Ark Invest, Elon Musk, boss of Tesla and Jack Dorsey, boss of Twitter, reaffirmed their interest in cryptocurrencies.

The intervention of the South African billionaire was particularly eagerly awaited: the eccentric billionaire has often touted the merits of cryptocurrencies, but worried about the impact of bitcoin on the environment.

Remoteness from China

On Wednesday, he announced that Tesla would “very likely” start accepting bitcoin as a payment method again. His concerns are, according to him, lessened by the tightening of Chinese laws against bitcoin “miners”.

The principles underlying bitcoin, the most popular cryptocurrency, require colossal energy with a carbon footprint comparable to that of a European country like Belgium
These companies, essential to the operation of the decentralized bitcoin network but consuming electricity, will relocate to regions where energy comes from less polluting sources, believes the billionaire. A welcome message for cryptocurrency enthusiasts, struggling recently: while bitcoin remains dizzying 290% year-on-year, it has fallen 40% since its peak reached in mid-April at nearly $ 65,000.

“Purchases have multiplied since the conference” The B Word “last week,” confirms Fawad Razaqzada, analyst at ThinkMarkets. But the cautious market, which moved away from risky assets due to the spread of Covid-19 last week, has kept the cryptocurrency from taking off, adds Susannah Streeter, analyst at Hargreaves Lansdown.

Another tech giant has since expressed interest: on Friday, Amazon posted a recruitment ad for a cryptocurrency project manager position. “It will start with bitcoin,” says an anonymous source to the CityAM business daily. “It’s still pure speculation for now,” said Ms. Streeter, an analyst at Hargreaves Lansdown.

Uncertain continuation

While she considers it “likely that more and more large players will accept cryptocurrencies,” she advises investors to place “only a marginal portion” of their portfolio in this rapidly moving sector. “This morning’s effervescent bitcoin price has been exaggerated by a significant number of lost bets,” commented James Bennett of cryptocurrency analyst ByteTree on Twitter.

A moderate initial move upward has caused investors betting on a downside to liquidate their position, which may exacerbate the rise of a financial asset. It remains to be seen in which direction the wind will blow: in recent months, efforts to regulate the decentralized bitcoin market have weighed on the price.

In addition to Chinese efforts to prevent the activity of minors as trading platforms, market regulators in Europe and the United States are stepping up warnings and sanctions. “I remain a bitcoin skeptic, but by going back above $ 34,500”, the cryptocurrency is enjoying a positive trend, said Jeffrey Halley, analyst at Oanda.

Bitcoin back over $ 30,000 – that’s what matters now

Bitcoin tore the important support in the range of $ 30,000 on Tuesday night. The chart-technical GAU could be averted by a rapid stabilization and the current rebound. However, this does not mean that the digital reserve currency is finally off the hook.

After falling below the psychologically and technically important mark, Bitcoin turned twice on Tuesday, almost exactly at $ 29,500, and then stabilized in the area of ​​$ 29,700. With a strong move upwards, he regained the 30,000 mark on Wednesday morning and is currently hovering around $ 30,800. This corresponds to a price increase of almost four percent on a 24-hour basis.

The risk that the price will finally fall out of the medium-term trading range and break through in the direction of the breakout level in the area of ​​$ 20,000 has been averted for the time being. This is undoubtedly good news, but the situation remains critical in the short term.

Relaxation would rebound towards resistance in the $ 35,000 area. The chart image would only brighten noticeably if it jumped above the upper limit of the sideways trend above 40,000 dollars. In the short term, however, there seems to be a lack of momentum for this.

Against this background, a stabilization and a continuation of the latest sideways trend would be good news. Long-term oriented investors are not impressed by the short-term price capers and stick with them.