Bitcoin Might Be Heading for a New High, Bulls Return With Vengeance

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Aug. 23 2021, Published 9:17 a.m. ET

Bitcoin prices have bounced back above the $50,000 level for the first time since mid-May. Like the crash, the rise in BTC prices has also been swift. Why are Bitcoin prices going up and what’s the prediction for 2021? Also, will BTC now test its all-time highs and move towards the $100,000 price level?

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Even by the generous volatility standards for cryptocurrencies, 2021 has been a particularly volatile year. Bitcoin prices tumbled amid China’s crackdown, global regulatory concerns, and Elon Musk’s breakup. At one point, BTC prices briefly plunged below $30,000. Now, they have recouped most of the losses since the bulls are back with vengeance.

Why Bitcoin's price is going up

There are fundamental and technical factors behind the rise in Bitcoin prices. Looking at the fundamentals, the geopolitical developments in Afghanistan are another bleak reminder of the waning power of the U.S., and by its extension the U.S. dollar. Many people see cryptocurrencies as an alternative to fiat currencies, mainly the U.S. dollar.

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In another sign of the mainstreaming of cryptocurrencies, PayPal will now allow customers in the U.K. to buy and hold cryptocurrencies like Bitcoin. In October 2020, the fintech giant allowed U.S. customers to hold cryptocurrencies and might extend the offer to other countries as well after the U.K.

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With the yields on debt still too low and gold prices literally going nowhere for the last few months, many investors see cryptocurrencies as a good alternative. A lot of investors see cryptocurrencies as the future of finance. We’ve seen good buying interest in cryptocurrencies after they crashed.

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Bitcoin price prediction

Bitcoin prices crossing above the $50,000 price level is a key psychological victory for BTC bulls. That said, Bitcoin prices are looking good on the charts too. After the crash, Bitcoin has been making higher highs and lower lows, which is a bullish technical signal. BTC prices now trade above all of the key moving averages including the 50-day, 100-day, and 200-day SMA.

Meanwhile, the 14-day RSI (relative strength index) of 69.9 suggests that BTC prices could now be near the overbought zone. RSI values above 70 signal overbought positions. The $51,000 price level would be the next key level to watch for Bitcoin as it could be a resistance based on the 61.8 percent Fibonacci retracement.

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bitcoin technical analysis
Source: TradingView

Overall, I would expect Bitcoin prices to consolidate at these levels before making their next up move. On the downside, Bitcoin should find strong support at the 200-day SMA, which is currently at $45,915. If BTC can hold the 200-day SMA it would indicate that the bulls are in charge.

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Will bitcoin prices reach $100,000 in 2021?

The $100,000 price level looks yet another number for Bitcoin prices and it would need to double from these levels to reach there. Many observers expect Bitcoin prices to go even higher than $100,000 and see the cryptocurrency going as high as $1 million.

Other investors don't see any utility in cryptocurrencies like Bitcoin. Also, crypto's appeal as a portfolio hedge and diversifier got shattered when it fell more than stocks in the stock market crash in the first quarter of 2021. The massive liquidity pumping by the U.S. Fed has found its way into cryptos as well. If the Fed decides to end the party and rolls back on the easing after the recent taper talks, we could see pressure on all of the risk assets including Bitcoin.

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