The price of Bitcoin (BTC), the leading cryptocurrency in terms of market value, reached $38,000, reaching levels not seen since May 2022. This increase comes amid a relatively quiet trading day in traditional markets following the US Thanksgiving holiday. The cryptocurrency briefly touched $38,000 before settling around $37,800, signaling a potential upside. So, what were the reasons behind the rally? What do analysts expect now?
Possible reasons behind the rise for Bitcoin price
According to data, the price of Bitcoin exceeded $38,000, rising to levels not seen in a year and a half. According to some, an important factor contributing to this rally is the resolution of legal issues surrounding Binance, the world’s largest cryptocurrency exchange. Binance, which recently faced challenges including founder Changpeng Zhao’s guilty plea, agreed to pay a significant $4.3 billion fine. The market reacted positively to this decision, and Galaxy Digital CEO Mike Novogratz’s earlier prediction of a “super rally” for Bitcoin came true.
Market sentiment is further boosted by expectations of U.S. Securities and Exchange Commission (SEC) approval for spot bitcoin exchange-traded funds (ETFs). Investors are expecting a decision by Jan. 10, with the potential for a more cost-effective way for institutional investors to enter the market. Confirmation may bring increased volatility, presenting both risks and opportunities for investors.
Impact of purges
Another important factor affecting the price of Bitcoin is the recent increase in market liquidations. Coinglass data reveals a significant increase in both long and short position liquidations, reaching a total of $80.29 million in the last 24 hours. Such liquidations often contribute to increased volatility in the market, affecting the overall price dynamics of Bitcoin.
On-chain metrics show bulls gaining the upper hand, with Bitcoin price reaching $38,300 for the first time since May 5, 2022. The purchasing power of the top 100 Tether (USDT) addresses has increased by a staggering 10% in the last six months, signaling an upward trend. Analysts predict the possibility of Bitcoin surpassing $40,000 in the near future.
Analyst made a warning
On the other hand, views provided by popular analyst il Capo of Crypto offer a nuanced perspective on Bitcoin’s rise to $38,400, a level not seen since May 2022. Known for accurately steering the cryptocurrency market, il Capo highlights key deviations and potential scenarios to watch out for. Analyst Il Capo of Crypto, who is generally bearish on the market, offers a cautious view, stating that although BTC is showing upward movement, the extreme levels of “greed, arrogance and arrogance” in the market are worrying.
The analyst suggests a potential for a break above $40,000, but warns of possible declines in the coming days or weeks. il Capo identifies critical support levels in the range of $30,000 to $31,000 and a divergence below $35,000 as key indicators of a bearish trend. Drawing parallels with the situation in 2022, when the price of Bitcoin reached $ 45,000-48,000, il Capo states that a similar feeling prevailed at that time and ultimately led to a correction with the price falling to $ 21,000-23,000.
What makes the current scenario different, according to il Capo, is the lower Bitcoin price compared to the previous period and significantly higher funding rates approaching all-time highs. This unique combination raises questions about the sustainability of the current upward trend. Looking ahead, il Capo poses the possibility of a break below $35,000 as a confirming signal of a bearish divergence. In such a scenario, the analyst sees the price falling below $30,000, with a specific target set at $12,000, a prediction consistent with il Capo’s long-standing projections.
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