Bitcoin Price Action Delights Bulls
Bitcoin (BTC) is off to a strong start in December, with its price surpassing $40,000 for the first time since April last year. The weekly close provided a boost to the bull run, wiping out shorts and increasing liquidity. The positive momentum is attributed to macroeconomic changes and anticipation of the United States' first spot price exchange-traded fund (ETF). Despite doubts and predictions of a major price retracement, Bitcoin continues to offer little respite for sellers.
Miners Prepare for the Halving
In addition to the market excitement, Bitcoin miners are also busy preparing for the upcoming halving. The hash rate is already at all-time highs, indicating a trend that is set to continue throughout the week. This further adds to the positive sentiment surrounding Bitcoin's price performance.
Is Bitcoin Getting Ahead of Itself?
As Bitcoin surpasses the $40,000 mark, market participants are questioning whether there is more upside potential or if the cryptocurrency is getting ahead of itself. With legacy markets opening and adjusting to this new price level, investors are keeping a close eye on Bitcoin's future volatility.
Liquidity and Economic Policy Changes
The recent surge in Bitcoin's price is attributed to a change in economic policy signaled by Jerome Powell, Chair of the Federal Reserve. The Federal Reserve's decision to lower baseline interest rates is expected to increase liquidity deployments and benefit risk assets like cryptocurrencies. The declining reverse repo facility of the Federal Reserve is also injecting additional liquidity into the economy, further driving the performance of risk assets.
Bitcoin Miners Continue to Increase Hash Rate
Bitcoin miners are relentlessly increasing the hash rate as they prepare for the block subsidy halving in April. The hash rate reached new record highs last month, reflecting the intense competition for block rewards. This trend is set to continue in December, with Bitcoin's difficulty readjustment adding to the already high hash rate.
Greed Levels Rise Alongside Bitcoin's Price
The recent surge in Bitcoin's price has led to an increase in greed levels among crypto investors. The Crypto Fear & Greed Index, a sentiment indicator, shows that greed levels are at highs not seen since November 2021. While the current bull market could have room to run, market participants should conduct their own research and be aware of the risks involved in cryptocurrency investments.
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