Bitcoin (BTC) price has left the cryptocurrency community in awe after reclaiming its two-year high of $50,000. The milestone comes as spot BTC exchange-traded funds continue to drive markets.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin’s market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Bitcoin purchases skyrocket
Bitcoin purchases have skyrocketed since the landmark approval of spot BTC exchange-traded funds (ETFs) in the US on January 10. Reports indicate that Wall Street could be buying BTC en masse with data showing purchases upwards of 12.5x more BTC per day than the network can produce.
Wall Street LOVES bitcoin.
They are buying up 12.5x more bitcoin per day than the network can produce.
The march to a new all-time high is underway if this continues.
— Pomp (@APompliano) February 12, 2024
With this, VC investor Bitcoiner and entrepreneur Anthony Pompliano says, “Bitcoin has become Wall Street’s favorite asset.” Pompliano also highlighted that Wall Street “not just likes, but loves Bitcoin,” attributing the turnout to the recently launched spot ETFs, which in his opinion, have set a record in the history of this type of asset.
Based on Pompliano’s calculations, 80% of all the BTC that is currently circulating in the market has not been moved over the last half year. Further, just about $200 billion in Bitcoin can actually be traded. With this, he concludes that the ETFs have managed to scoop 5% of all the BTC supply that now trades in the market barely 30 days since the investment product went live in the market.
Following the $50,000 milestone, Mexican billionaire Ricardo Salinas said, “You have to know how to be patient, not get scared when it goes down and buy” it.
Bitcoin price outlook as Wall Street goes berserk with spot BTC ETFs
After tagging the $50,000 psychological level, Bitcoin price has retraced, coming on the back of traders cashing in early on the gains. It also follows the typical correction characteristic of an overbought asset with the Relative Strength Index (RSI) reading above 70.
Nevertheless, the upside potential remains alive for Bitcoin price, considering that the RSI remains northbound and suggests rising momentum. The Moving Average Convergence Divergence (MACD) indicator is also above its signal line (orange band) with both in positive territory.
Increased buying pressure could see Bitcoin price make a decisive move above the $50,000 blockade with a possible extension to the $60,000 psychological level. Such a move would constitute a 20% climb above current levels.
BTC/USDT 1-day chart
On the other hand, if profit-taking abounds, Bitcoin price could retract further, possibly falling into the supply zone that currently provides support between $44,300 and $46,760. A break and close below the midline of this order block at $45,554 would confirm the continuation of the fall.
Such a directional bias could see Bitcoin price lose support due to the ascending trendline to test the $41,880 support, or in a dire case, roll over to tag $40,643.