Bitcoin's price has been gathering strength despite the flurry of negative news trends lately including the Financial Conduct Authority (FCA) of the UK banning crypto derivatives; US stimulus talks stalling and KuCoin suffering a hacking attack last month. Nevertheless, the digital currency continued to climb, touching the $11,800 level.
The world's largest digital currency traded 2.37 percent higher at $11,732.68 on Tuesday, said CoinDesk data.
2020 U.S. Presidential Elections remain a strong viewpoint for investors, as the correlation between USD/BTC stands inverse. Therefore, a weakening in dollar will be a boon for BTC.
Fed Reserve's move: The crypto community is also closely watching Federal Reserve's move in the digital currency space. US Fed Chairman Jerome Powell's recent comment has put bitcoin's rally on-hold.
Powell said that the central bank is indecisive on issuing a digital currency, as it is still figuring out its costs and benefits.
Bitcoin's fundamentals: According to CoinTelegraph, on a technical level, signs of record strength continued pouring in this month. The difficulty, which provides an estimate of miner competition and network security, is now back at all-time highs.
"Two days ago, the latest readjustment saw difficulty increase by a larger-than-expected 3.5 percent. At the same time, the hash rate also climbed to a new average all-time high on Monday. The popular theory that price follows hash rate remains firmly in force as miners are more bullish than ever on Bitcoin as a long-term investment prospect," added the digital currency portal.
Analysts' View: Goldman Sachs last week said that a Democrat win would dent the dollar, the long-term prospects for which are already shaky. However, Trump's reelection would not be enough to keep the greenback out of danger.
The recent strength enjoyed by BTC is also on the back of bullish market dynamics, said Avi Felman, head of trading at BlockTower Capital to Forbes.
Felman further indicated that there is additional cash flow flowing into the bitcoin markets, potentially new allocations. He forecasted that “$12,000 may well fall shortly, and then we will face the 16-month wall at $14,000, which is really a surrogate for a new all-time high,” he added.
CoinTelegraph Markets analyst Michaël van de Poppe feels that the rally could be towards the area of $16,000 to $17,000 after which there will be a consolidation period for a long duration.
If a bull market materializes, it will be bitcoin-fuelled, said Van de Poppe, recommending to accumulate BTC even at $16,000 range.
First Published: IST