Bitcoin price just secured a new 2020 high and traders expect the price to rise higher for 3 key reasons.
On Oct. 21 Bitcoin (BTC) price overtook the $13K mark to reach $13,217 after traders took out key resistance levels at $11,900, $12,000, and $12,500 in the last 48-hours. While there are various technical reasons behind the abrupt upsurge, there are three key factors buoying the rally.
The three catalysts are a favorable technical structure, PayPal enabling cryptocurrency purchases, and Bitcoin’s rising dominance rate.
PayPal’s crypto announcement adds to BTC’s momentum
Earlier today, PayPal officially announced that it is allowing users to buy and sell cryptocurrencies, including Bitcoin.
Throughout the past year, speculations on PayPal’s potential cryptocurrency integration continuously intensified after various reports claimed the company was working on it.
In an official statement, Dan Schulman, the president and CEO of PayPal, confirmed the cryptocurrency integration. He wrote:
“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
Following PayPal’s statement, the price of Bitcoin immediately rose from around $12,300 to as high as $12,900.
Sui Chung, the CEO of CF Benchmarks, a subsidiary of Kraken exchange, told Cointelegraph that bullish sentiment is likely returning to the crypto market. According to Chung:
“Bitcoin passing $13,000 today, a 16-month high, demonstrates that this trend is only picking up pace. That PayPal, a household name, has received a conditional BitLicense is likely propelling bullish sentiment. Today is significant as a signpost for further price appreciation in the future… the point by which mainstream media and ‘mom and pop’ retail investors may soon start to show interest in the asset, as they did in late 2017.”
Bitcoin dominance is rising
In the past week, Bitcoin has outperformed alternative cryptocurrencies, decentralized finance (DeFi) tokens, and Ethereum.
Josh Olszewicz, a cryptocurrency technical analyst, said the dominance of BTC is above a key moving average. Technically, this suggests that Bitcoin could continue to outperform altcoins in the near term. Olszewicz said:
“BTC dominance back above the 200-day moving average for the first time since May, king corn is back.”
BTC shows a bullish high time frame structure
Throughout October, traders have pinpointed the favorable technical structure of Bitcoin on the higher time frames.
Bitcoin’s weekly chart, in particular, has shown a breakout and surpassed the previous local top achieved in August.
Two months ago, BTC topped out at $12,468 on Binance and proceeded to fall below $10,000. As mentioned earlier, today’s high volume surge took the price to a new 2020 high at $13,217, which is well above the previous local top.
In the short-term, traders anticipate that the market will cool down after such a strong rally. Flood, a pseudonymous crypto futures trader, said:
“I think we are quite overextended on $BTC for now. I’d imagine seeing a bit of a retrace where we try to find support in the 12.2-12k range. Not saying we can’t run further, but hedged a bit here.”