Markets may have gotten used to Bitcoin, the first digital currency, reaching new highs over recent months. So, the fact that Bitcoin reached a new fresh record at $64,374 on April 14 may not seem so sensational any more, even with a heartbreaking upside movement by 5.5% in a single day on April 13.
This may be another reason why the perception around digital currencies seems to be changing. The rise of the Bitcoin in 2020 was more related to the extremely risky nature of digital assets that gained amid global lowering of interest rates and money printing stimulus measures worldwide with the Greenback losing its strength. Moreover, this kind of nature of Bitcoin is still in place. But it would not be enough to boost Bitcoin prices from $29,000 to the recent records in three months, even if the above mentioned external conditions for the first digital currencies remains intact.
The underlying reason behind this rally seems to be that digital currencies are increasing their functionality towards becoming a classic currency. Bitcoin has recently acquired new and wider functions as a medium of circulation, payment and savings. It is accepted as a payment method by large corporates while also becoming an instrument of investment by large companies and banks, such as, the Bank of New York Mellon, Mastercard, Tesla and others.
The previous rally of Bitcoin from $38,000 to $58,000, or by 52% in two weeks, this February was related to the statement by Elon Musk that Tesla has acquired Bitcoin for $1.5 billion and is going to accept this digital currency as a payment for its production, including its famous electric vehicles. This unexpected move by large automaker Tesla seemed to push Bitcoin’s reputation beyond the limits among its devotees and increased its practical applicability, creating a precedent for many to follow.
Another rally happened just before the largest digital currencies exchange Coinbase listing on the Nasdaq index. The digital exchange market cap hit the large figure of $85 billion compared to the market cap of the Nasdaq index itself at $26 billion. With this listing the exchange of digital currencies has seen to receive a landmark recognition by civilised investors society.
The technical picture may suggest that Bitcoin prices may continue to rise to the next price targets at $65,000-66,000 per coin. However, Bitcoin is looking overvalued regarding the pace of its rally. Positive factors that are favourable for Bitcoin are already priced in by the market. So, the consolidation of the price with possible correction to strong support levels at $51,000-56,000 may be expected.
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