The price of bitcoin soared to new heights after Tesla informed the public that it added $1.5 billion to the companyâ€™s balance sheet. Bitcoin touched an all-time high (ATH) reaching $48,216 per unit and has retreated in value a hair since then. While crypto enthusiasts are bullish, a few supporters and analysts believe the crypto asset might be overbought, and bitcoin prices may see a drop as we cross over into the Chinese New Year.
The Crypto Economyâ€™s Trillion-Dollar Market Cap Continues to Swell
Bitcoin (BTC) has seen significant gains during the last 24 hours as the cryptocurrency touched an ATH at $48,216 per coin. During the last hour, the crypto asset is exchanging hands for prices between $46,500 to $47,100 per unit with $39 billion in global trade volume.
Out of the $1.32 trillion market cap amongst all 8,416 cryptocurrencies and 33,534 markets, BTC has a dominance rating of 62.9% today. BTC has gained 27% this week, 18% during the last month, 188% for the 90-day span, and 360% against the USD for 12 months. Ten years ago today, the price of bitcoin reached $1 and yesterday was the largest daily candle in history.
At 4:02 a.m. (EST) on Tuesday, markets.Bitcoin.com data shows that ethereum (ETH) tapped the $1,800 range. Currently, ETH is swapping for $1,748 per unit and captures roughly $13.2 billion in global trade volume.
Polkadot (DOT) is trading for $22.99 per coin and has displaced cardano (ADA) after the two currencies have been battling for the fourth largest market cap. Cardano (ADA) is swapping for $0.68 at the time of publication with $21 billion worth of volume.
Coin Metricsâ€™ State of the Network: Ethereum Onchain Transfers Top Bitcoinâ€™s Transfer Value
â€œBTC and ETH onchain metrics were in the green across the board this past week,â€ Maddrey detailed in the firmâ€™s 89th newsletter. â€œBTC market cap grew by 12.9% week-over-week, while ETH market cap grew by 19.6%. BTC and ETH realized cap also grew by 3.3% and 12.8% respectively, as both continue to set new all-time highs,â€ Maddrey added.
The Coin Metricsâ€™ analyst continued:
Tesla Moved the Needle
The cryptocurrency analyst Simon Peters explained on Tuesday that people should expect a giant shift into the crypto economy following Teslaâ€™s recent purchase. â€œYesterdayâ€™s move by Tesla to invest in bitcoin and start accepting it as payment for its own products really moved the needle,â€ Peters said.
â€œAlready there is talk of copycat moves from Apple and Google, linking it to their own payment systems. The shift to digital consumption is growing. We expect to see others follow in Teslaâ€™s footsteps, with bitcoin payments increasingly making sense for businesses that conduct nearly all their sales online,â€ the Etoro analyst added.
Is Bitcoin Overheated? Technical Indicators Say Yes
On Twitter, analysts and crypto supporters are questioning whether or not bitcoin (BTC) is overheating at this point. Linas BeliÅ«nas asked his Twitter followers: â€œIs bitcoin severely overbought? These indicators suggest it is,â€ he added. BeliÅ«nas shared an image stemming from the data site Marketmilk that shows a number of technical indicators.
Marketmilk stats show that indicators like Bollinger Bands, Relative Strength Index (RSI), Stochastic Oscillator, and other signals suggest BTC is â€œoverbought.â€
Tradingveiwâ€™s network summary of technicals, however, is different as the summary says BTC is a â€œbuy,â€ moving averages point to a â€œstrong buy,â€ and oscillators are reading â€œneutral.â€
The Chinese New Year Transition
Some crypto enthusiasts think thereâ€™s a great possibility of a Chinese New Year dip ahead for bitcoin (BTC) as value drops have traditionally been consistent during every Chinese New Year transition. On February 5, 2021, the cryptocurrency supporter Tyler Reynolds told his 17,000 followers that a correction may happen soon.
â€œIf I had to guess, defi just broke itâ€™s parabola and weâ€™ll drop at least 40% from these levels,â€ Reynolds tweeted. â€œETH and BTC wonâ€™t drop 40%. If it did break (still unclear), I would expect a fairly sharp pick up (
â€œI have my guns loaded to buy this upcoming dip which I also believe is overdue,â€ Coingecko founder Bobby Ong wrote to his Twitter followers this week. â€œChinese New Year dip, Iâ€™m all ready for you. Buy orders at 30% from ATH peak has been set. Letâ€™s see if a correction comes this weekend.â€
Last yearâ€™s Chinese New Year was the â€œYear of the Rat,â€ and this year is the â€œYear of the Oxâ€ or Metal Bull. However, just because this pattern has been consistent over the last few years it may not come to fruition. For instance, traditionally during the end of the year in the U.S., thereâ€™s a lot of sell-off before January 1 because of tax implications. Instead, cryptocurrencies like BTC and ETH touched new all-time price highs and continued to jump forward into 2021.
What do you think about the recent price movements within the crypto economy? Let us know what you think about this subject in the comments section below.
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