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Bitcoin Breaks $40K: New ATH in Sight?

February 6, 2021 at 13:28 by Ibrahim Anifowoshe

Bitcoin has broken the $40,000 hurdle. At 14:24 GMT on Saturday, a BTC was trading $40,207, a 6.05% gain in the last 24 hours.

At the beginning of the month, the currency was at $32,000. At press time, the cryptocurrency is nearing its previous all-time high of $42,000. The price is showing signs of a newfound rally as it breaks the $40,000 resistance area. The optimistic on-chain data points and a favourable market structure is leading analysts, traders, and investors to look forward to an impending break to a new all-time high.

bitcoin above 40k

$38,000 to $40,000 have remained, in the short term, the biggest hurdles for Bitcoin. The longer the coin took to break $40k, the higher the chance of a correction. It’s important that Bitcoin stays above $40,000. Within the last three weeks, the price remained below $38,000. This caused the momentum to stagnate in the short term. As the pioneer cryptocurrency breaks a new level above $38k, it has established a support level.

Retailers and whales continue to push

Retail stock investors have shifted attention to Bitcoin in recent times. This is because of the no-halts trading space it offers compared to boring traditional stocks.

Notwithstanding this, institutional investors continue to dwarf retailers. Microstrategy had a conference aimed at corporate treasury managers earlier this week

Following the conference, Ross Stevens, the Founder and CEO of Stone Ridge Asset Management which has about $20 billion in assets, announced that some $25 billion from institutional investors is apparently on its way to bitcoin.

On-chain data provided by Santiment also point to the fact the whales have continued to eat into retail investors over the last few days. This trend is notable as whales have continued to accumulate despite the increase in the price of the asset.

chart showing whales accumulation

Additionally, the number of whale addresses on the network with over 1,000 BTC have for the first time surpassed addresses with between 10 to 1,000 BTC.

What next?

Many analysts are of the view that once Bitcoin enjoys a clean break above $40,000, a smooth sail upward should be expected. Some predict this upward momentum may be explosive. Bitcoin had earlier seen a similar break in December 2020, when it struggled to break $30,000. When the break occurred, the price quickly skyrocketed to $42,000.

Chad Steinglass, head of trading at CrossTower crypto investment platform, said that:

If new investment demand can eat through this wall of sell interest, and Bitcoin does breakthrough $40,000 again, and especially if it notches new all-time highs, I expect that the volume of these risk-reduction sellers will evaporate quickly, and that could pave the way for another leg higher.

However, Joel Kruger, a cryptocurrency strategist at Lmax Digital doesn’t seem to agree that a break will lead to boost. He believes that Bitcoin could rally to $40,000 price level. This level would remain a more “meaningful” resistance area. He notes that:

Current price action is indicative of consolidation in the aftermath of a significant rally.

He was more careful suggesting that the king cryptocurrency will continue upward. He said:

We don’t believe the market should be expecting a meaningful bullish continuation beyond $40,000 just yet. Weekly and monthly technical studies are still tracking in severe overbought territory.

With this new break, Bitcoin may be entering into a dangerous area. Is this just the coin testing $4,000? or is it about to go to the moon?

If you have any questions and comments on Bitcoin today, use the form below to reply.

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