A Bitcoin price rally sustained for six days in a row, but it is now looking to halt amid renewed profit-taking sentiment.
The last 48 hours of trading saw BTC/USD forming a local top above $11,700. However, the level attracted more sellers and fewer buyers, causing the pair to flip lower towards $11,350. On Wednesday, it managed to secure a short-term price floor in the $11,350-11,400 range, leading some analysts to predict a consolidation trend.
One of those chartists included Nebraskan Gooner, a pseudonymous Twitterati famous for his medium-term market outlooks. He said in a tweet:
“I wouldn’t be surprised if we ended up chopping around in the 10.5-11.5k zone for a while […] [We] need to flip $11,700 for a more bullish scenario.”
In between the lines was a bearish alert. Nebraskan Gooner noted that breaking below the $10,500-support level would extend the downside correction towards $10,000. It is the same price floor that traders had failed to break bearish during the third quarter.
A Minor Blip, Nevertheless
The fears of an extended bearish move appeared more technical. Fundamentally, Bitcoin seemed to have entered its most bullish state as more mainstream companies add the cryptocurrencies in their portfolios.
On Tuesday, Forbes reported that Stone Ridge – a hedge fund that manages $10 billion in assets, holds $115 million worth of BTC. The news followed a similar revelation by global payments platform Square that showed $50 million worth of BTC in its balance sheets.
Simultaneously, Bitcoin Treasuries, a portal that tracks BTC investments across the global firms, noted that a total of 13 public companies holds more than $7 billion worth of BTC. They included Microstrategy, Galaxy Digital, Square, and Grayscale Investments.
Not only @Square, in 2020 there are more than 10 Public Companies investing in $ BTC, with a total value of over $ 6 billion, equivalent to nearly 600,000 BTC.$BTC #BTC pic.twitter.com/7zxX94Clwx
— Coin98 Analytics (@Coin98Analytics) October 13, 2020
The reason behind the firms’ sudden interest in Bitcoin is a bearish US dollar.
Global analysts believe that the greenback could fall lower as long as the Federal Reserve maintains interest rates near-zero and buys infinite bonds. Atop that, the US government’s aggressive stimulus policies to aid Americans through the coronavirus pandemic has further led the dollar lower.
Under such circumstances, investors’ most common safe-haven asset – the US Treasury bonds – are yielding either very low or negative yields. That has left them with no choice but to seek better returns in the stock, commodity, and even Bitcoin markets.
Therefore, even a price correction towards $10,500 – or below – could prompt investors to purchase Bitcoin at a lower rate.