Bitcoin Reaches The Highest price After Recent Day Surge, Analyze

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Bitcoin is in pullback mode reaching into the weekend as bulls take a rest. After spending most of the day in negative territory, cryptocurrencies had a late surge on Friday with bitcoin hitting the highest level since mid-May. Bitcoin is trading above $41,000 at the time of time report at the moment. And it is also up more than 15% over the past seven days. The bullish sentiment came back after a sharp sell-off in May and two months of consolidation above the $30,000 support level.

Some of the analysts have an optimistic opinion and expect buyers to stay active above the 50-day moving average. Which is above $34,000 now.

“We have been talking about the market having lower liquidity during the summer for a few weeks now and we think this helps explain the sharp price action we saw that triggered the short squeeze of nearly $1 billion in futures liquidations,”. David Grider, a strategist at FundStrat, talked about this in a Thursday newsletter.

In addition to it, Grider said that bitcoin’s spike might throw back a flight to safety from Chinese investors looking to “get out at any cost,” given the recent sell-off in Asian equities. “Bitcoin could have been trading as a proxy tool for investors looking for a hedge,” Grider said.

The U.S. central bank’s strategy

Federal Reserve Chairman Jerome Powell announced the safety of the markets this week. Which the U.S. central bank is thinking about when to start winding down its program of purchasing $120 billion in bonds every month. However, Wall Street analysts are already wondering what will come after that.

Based on Bank of America, the Fed might not get around to raising interest rates anywhere close to the levels that were considered normal historically, anytime soon. That points that monetary policy could stay loose for years. Even after the Fed stops actively printing money to pay for the purchases of U.S. Treasuries and mortgage bonds.

The dynamic could be bullish for bitcoin. Since many investors see the cryptocurrency as a hedge against the inflation and dollar debasement that could come from easy-money policies.

A resemble shallow Harding pattern was observed toward the end of 2018. When the Fed pushed the benchmark interest rate up to around 2.5%, traditional financial markets went into a swoon, and by early 2019. The central bank had reversed course and started cutting rates again.

Based on the Bank of America analysts, bond market investors cloud already be predicting the dynamic. This may clarify why 10-year U.S. Treasury yields are at historically low levels of around 1.2%, well below the most-recent annual inflation rate of 5.4%

“We think the level of rates in the U.S. reflects a market expectation that the Fed will produce only a shallow hiking cycle,”. The analysts said.

Bitcoin active entities

The active entities of bitcoin have surged over the last week, rising 30% to 325,000 active entities per day, according to Glass node. The number has been in decline from January to mid-July.

Entities refer to “a cluster of addresses that are controlled by the same network entity and are estimated through advanced heuristics and Glassnode’s proprietary clustering algorithms,” according to Glass node. Active entities include those active either as a sender or receiver.

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