Bitcoin (BTC) was developed by an unknown group of people using the alias of Satoshi Nakamoto and was initially launched in 2009. Working on blockchain technology, it was the first cryptocurrency that even came into existence.
Bitcoin’s inventor designed it for use as a medium for daily transactions and a way to circumvent the traditional banking infrastructure after the 2008 financial crisis. There has been a subsequent movement in its usage and price, which led the cryptocurrency to cross the milestone of $1 trillion in market capitalization in April 2021. Of this capitalization, $500 billion was added in 2021 itself. The massive bullish sentiment among the Bitcoin community has been a driving factor behind the surge in its value.
What comes after the huge price correction?
The price correction has burst the bubble, which caused the crypto market to inflate into offering triple-digit returns. As such, the future of bitcoin is dependent on its use of energy and the impact of other cryptocurrencies offering similar decentralized currency transactions.
Elon Musk’s decision to halt Tesla from accepting bitcoins as payment for purchases of vehicles with bitcoin citing environmental concerns over the adverse impact of Bitcoin mining. It requires far more power consumption due to big computer farms using computational power to validate a transaction done based on Bitcoin’s blockchain network.
Crypto mining is used to generate cryptocurrencies for validating the transaction process on its network. Meanwhile, multiple articles were published worldwide, giving the limelight to the important topic of energy requirement for bitcoin mining and its support to the global warming crisis. Miners are incentivized to find cheap and green energy sources and work through them.
Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.
— Elon Musk (@elonmusk) May 24, 2021
The latest tweet by Tesla Boss Elon Musk stating his interaction with Bitcoin miners to come up with current & Planned renewable usage can cause a stir in the market. But since his tweets have been shaking the entire crypto market, it will be interesting to see if crypto traders take this tweet in a positive light.
Many believe that constant interference of Elon Musk’s tweets in market momentum can force his followers to part their ways. Hence, it will be difficult to predict the outcome of this potentially positive statement. There is a good chance that we will witness a fresh leg of selling in the market.
Bitcoin Price Analysis
Technical Analysis is what we require to properly analyze securities that trade on a chart pattern using mathematical tools and indicators to identify the right time to trade or invest with proper entry and exit points.
From the 200 days moving average line, we can see the BTC price is trading below the 200 DMA, hovering around $40500. Witnessing a price consolidation around the 200 DMA signifies the struggle it faces in causing an upward rally.
As Bitcoin struggles to breach the 200 DMA level, which has become a strong resistance in any possible upward rally. Until it breaks the 200 DMA, Bitcoin can quickly transcend into a weak signal causing a fresh round of selling. At the same time, there is a squeeze in volatility and price range after a slight upward rally from the recent low levels of Last day of $31000 Approx.
It is advised that intraday traders, small-term traders, and investors looking for perfect entry time should wait for some consolidation and should consider maintaining a buy only above 200 DMA. There can be sharp profit booking or another leg of panic selling, given it has tried hard to cross the 200 DMA.
MACD is also showing up for consolidation in the range for the time being as it is above the histogram. The Blue Line crossing the Orange line is considered a weak sentiment showing a selling opportunity. Break-out signal will get confirmed for short-term traders to take a position if it breaks the last day low of $31000.
For now, the momentum of the Bitcoin counter seems negative, and profit booking seems imminent. Short Sellers can make a decent profit from this opportunity to re-enter at lower levels.