In the past seven days, the Bitcoin market has come surging back up, sparking speculations that the bull market is back for good. Bitcoin surged 20.99% in the past week, rallying past $40,000 for the first time since June. It is currently trading at about $39,661.
Bitcoin seems to have entered its best quarter yet. With inflation looming menacingly in the US and the global market following central banks printing more money, investors will search for better safe-haven investments. Bitcoin just may see increased adoption as an inflation hedge investment.
One person who believes inflation is on the rise is CEO of BlackRock Inc, Larry Fink, who stated in an interview with Reuters that he thinks the next few years for the US economy are going to be inflationary, rather than transitory inflationary as the Federal Reserve chairman, Jerome Powell, seems to think.
Fink has also predicted that while inflation will not be as bad as in the 1970s, it will still be above 2%. His company BlackRock Inc, which has exposure to Bitcoin as one of the shareholders of MicroStrategy, plans to raise all its employees’ salaries by 8%, effective in September.
What this means for Bitcoin is that funds inflow could surge significantly as it did in Q3 of 2020 when Bitcoin surged 18% to hit a yearly high at the time amidst global uncertainty caused by the COVID 19 pandemic. Additionally, on-chain metrics made available by Glassnode show that a supply squeeze is imminent in the market as miners are once again markedly bullish; accumulating their mined Bitcoins at levels that mirror the price surge from $50,000 to $60,000 earlier this year.
With the year nearing a close, Bitcoin could well reach $60,000 again if this current trend continues. When the market value reaches $60,000, there will likely be massive activity in the market as both retail and institutional investors scramble to not miss out on the uptrend. Combined with a supply squeeze, FOMO is likely to push the price of Bitcoin through the roof which would be another big boost for the cryptocurrency. With the rise of Bitcoin, the rest of the cryptocurrency market is also likely to rise with it to new highs.
However, there are a great number of factors that could go wrong and see the market crashing again. The current levels need to show resilience and prove to be sustainable even if institutional or government actions trigger the market as they have done in the past. If the market falters in the face of market-moving events, the current momentum may be lost and there could be a reversal to previous lows in the market.
via ZyCrypto