Buy Bitcoin at 1-year high?
- Bitcoin is being traded at a value above $30,000 despite the US dollar becoming stronger compared to other fiat currencies.
- The news that BlackRock is preparing to launch a spot Bitcoin ETF has helped in this regard.
- The lawsuits filed by SEC have created an atmosphere of uncertainty.
After breaking out of a consolidation pattern that looked like a bullish flag, Bitcoin trades at a 1-year high. As such, the cryptocurrency has made a new higher high, indicating a bullish trend, although it has been consolidating since April.
Given that Bitcoin is trading above $30k, it is hard to bet against it. This is especially true when we consider what has happened in the traditional currency market, where the US dollar has strengthened against all other currencies.
For instance, the EUR/USD exchange rate dropped from 1.10 to 1.0850 upon the news that the European PMIs weakened more than the market had anticipated. Similarly, the GBP/USD also fell on weak UK data.
Despite the strengthening of the US dollar last week, it did not gain against Bitcoin. In fact, Bitcoin gained against it.
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Chart of Bitcoin by TradingView
What drives the Bitcoin price higher?
It is evident that the weakness of the US dollar is not the driving force behind the rise in Bitcoin’s value. Therefore, something else must be the cause of this bullish trend.
There are two possible explanations. One is related to BlackRock, the American multinational investment company, which is one of the largest in the world. News has surfaced that the company has submitted an application for a spot Bitcoin ETF designed to track the underlying market price of Bitcoin. As a result, some argue that BlackRock might know something in advance.
The second explanation is that investors’ trust in the industry is increasing with the recent SEC lawsuits. A more transparent industry should be a positive for crypto investors.
Regardless of the reason, Bitcoin continues to trade above $30k despite the US dollar becoming stronger against other fiat currencies. If the divergence continues, Bitcoin may have more potential for growth.
On the flip side, no one knows how the cryptocurrency market will react to the Binance and Coinbase verdicts.
