The price of bitcoin has reached several high points in the past few days, breaking through the best performances it had in several months. On Friday, September 3, it managed to climb to the highest point since May and since then it has fluctuated in a relatively tight range. These results have not been seen since May 15, to be precise and naturally, they have the entire crypto community feeling very optimistic about the start of the month. Others are eager or even desperate for some explanation about the trajectory of the price movement in the previous weeks, especially when it comes to the ethereum network.
With its token reaching over 4,000 USD on Friday and being in close vicinity of its previous all-time record, some believe that the figures like 10,000 USD for an ETH token might be only months away. However, some analysts are cautious about such prospects and point out that the current rally has to have at least some major pullback moments. To get a grip of that situation, here is an overview of the main relevant factors currently in play with this strong price increase. Those include some currents in the crypto markets that might be pushing the influence away from bitcoin as the biggest cryptocurrency in terms of price and market capitalization and towards the surging ETH token and its, technically much more powerful, ethereum network.
Like usually it is hard this time as well to pinpoint the exact causes of the rally and their interactions. However, unlike stocks that are usually driven by their fundamental values and changes in the entities they represent, cryptocurrencies are mainly driven by markets. That means that market interest will drive up and drive down stock price somewhat, but it will explode a crypto price almost overnight. The same is in line with the general approach that the digital world takes in all of its shapes and forms.
Because of that, a random video can gain a viral status in a matter of hours and a digital esport will be watched by millions across the globe even though it did not exist only months prior. Presently, there are numerous market dynamics that are causing a positive sentiment and pushing the prices up. So, bullish factors are lining up and creating an atmosphere of mutual support that is definitely clearly resonating with the investors.
El Salvador Introduction of Bitcoin
One of the bigger factors that are playing a part in the ongoing bull run is El Salvador’s introduction of bitcoin as its officially recognized national currency. Next week, the poor South American country will start using BTC tokens just like any other formal currency inside of its borders. This is according to many analysts driving a lot of optimism on the side of investors. But at the same time, the main reason for such focus on this development is the fact that it is first and foremost a historic decision by a country.
None before El Salvador decided to take on such a move in its legislative, regulatory and financial circles. Aside from that, the fact remains that this nation is a tiny player in the international monetary markets and likely plays little role besides proving a point that countries can both comprehend and accept digital currencies like any other form of money. In the immediate future, however, that has little significance as the introduction is clearly strong and positive market news right now.
Unlike El Salvador, the USA is more than a relevant player in the global arena of international finance. Many analysts are also pointing towards its influence, albeit indirect, on the market prices in the cryptocurrency domain. That includes the recent reveal that the FED is not planning to slow down their programs that involve asset purchases. This process boils down to the ongoing pumping of money into the US economy and a looming inflation crisis that comes out of that.
Also, it is important to note that the US Fed is by no means an anomaly in that regard. Other nations, including major financial and economic countries, are doing the same because their systems remain under pressure from the ongoing coronavirus pandemic. In turn, many institutions recognize that they have to seek refuge in other assets. In that group, assets that are not affiliated with the US dollar have clear advantages. For many companies, BTC and other digital tokens are the perfect opportunities for that particular safety net. Ever since the end of 2020 when some big companies like Square and Tesla Motors decided to invest in crypto, many other businesses have been eyeing the same opportunity. Now, it seems that the cash injection policies of counties across the world are only adding weight to that argument.
The decisions coming from cryptocurrency whales are also giving some additional clues about the overall bullish picture that is the currency being painted by all of these factors. Data from on-chain analytical platforms shows that long-term investors and whales have been drastically accumulating assets in the range of 46,000 USD and 50,000 USD. That accumulation lasted for more than six weeks and many noticed it even before the price spike began. The same movement also involved whales moving cryptocurrency tokens away from exchanges to their cold storage and other secure means of having and holding the same digital currency.
Historically, this points to a new leg of a bitcoin bull run, which today might be playing second fiddle to the ethereum network. Currently, the reversal of the bullish trend might take the price of BTC to the lower range of 40,000 USD. The same would include a slide of ETH towards 3,000 USD. However, barring a big unexpected regulatory disaster, the bullish outlook for the wider crypto space remains in place. Chances are that it will push new record prices before the end of the year if nothing catastrophic takes place.