Bitcoin broke the critical $45K resistance level and is back to its $47.5K highs not seen since the beginning of January. After recording a price jump of over 6% today, the leading crypto has maintained its uptrend for nearly two weeks now.
The crypto market as a whole is green and bullish once again having reclaimed its value of more than $2 trillion. The question is why, and will it be long-lasting?
What Caused the Market Recovery
There is no single reason for why the crypto market is back in the green, it is more like an amalgamation of multiple smaller-scale factors that have been driving prices forward.
Sponsored
One of these is the recovery of the stock market. Major indexes like S&P500, Dow Jones, and Nasdaq 100 increased from 6% to 8% over the course of the past weeks despite the forecasts of global recession caused by the war in Ukraine and the subsequent rising oil prices. At the same time, Bitcoin’s correlation with stock market movements reached its highest level in 17 months, meaning that BTC is much more in sync with the stock market than with traditional safe-haven assets like gold.
Secondly, Bitcoin is once again in demand among whales. The Luna Foundation has already bought more than $1.1 billion worth of Bitcoin to build a reserve for its stablecoin UST. Furthermore, Terra Founder Do Kwon, disclosed his own plans to build $10 billion in Bitcoin reserves.
There has also been a steady rise in big capital exploring the possibilities of entering the crypto space with the world’s largest asset manager, BlackRock, even preparing to offer a cryptocurrency trading service to its investor clients. Skepticism of crypto is seemingly melting away and even US Treasury Secretary Janet Yellen acknowledged that “there are benefits from crypto and we recognize that innovation in the payment system can be a healthy thing.”
What’s on the Horizon?
These fundamentals and the momentum generated seem capable of driving Bitcoin further, potentially to the next resistance level of $52K. The ensuing growth could be even higher, leading to a rally to $65K or further were BTC to break the nearest resistance.
But despite these positive factors, there are several limitations on the horizon that could put Bitcoin’s steep growth at risk or even bring it to heel, pushing its price back below $45K.
First of all, European Union countries and the United Kingdom are tightening regulations around digital currency service providers. Legislative updates are planned to come into effect in the nearest future as a response to the increased risk of cryptocurrency usage to avoid economic sanctions.
In other parts of the world, from this Friday, April 1st, India will start charging its cryptocurrency users 30% taxes on any cryptocurrency assets sold at a profit. India has one of the largest numbers of cryptocurrency owners in the world as cryptocurrencies in the region have seen an exponential increase in interest since 2020.
