Bitcoin Breaks Yearly High: Is It Safe to Buy Now?
Summary
- Bitcoin recently rallied close to $25k, a new high for the year.
- The rally is indicative of further strength and has been in total divergence with the US dollar.
- Further upside is possible if the EUR/USD regains 1.10.
Bitcoin Rallies Close to $25K
Bitcoin investors must be thrilled as the leading cryptocurrency trades close to $25k. It is a new high for the year and a significant development for Bitcoin for at least three reasons. First, with the recent movement, Bitcoin returns for the year are close to 50%. Considering that we are only in the middle of February, that is no small achievement. Second, Bitcoin broke the previous high while maintaining a series of higher lows. That is indicative of further strength. Third, the recent upside came in a total divergence with the US dollar. The dollar gained after an inflation report was released last Tuesday, as seen by USD/JPY trading above 134 or EUR/USD trading below 1.07. But Bitcoin did not follow suit and continued its rally instead. BTCUSD chart by TradingView
Will Bitcoin’s Rally Continue?
When looking at Bitcoin’s performance compared to EUR/USD it becomes clear that Bitcoin’s rally might continue if EUR/USD reverses its recent losses and moves back to 1.10 – which is its high for this year – then one should expect to see Bitcoin trading close to or above $30k.
What Caused This Rally?
The current rally diverges from US dollar’s strength; when USD dropped from 1.10 to 1.07, so did BTC from $24k down to $21k; however now that BTC rallied while USD did not remain strong it might be indicative of BTC leading USD weakness moving forward into more gains should EUR/USD reverse its losses on move back up towards 1.10 again..
