Bitcoin rallied to near all-time highs on Friday as three drivers are set to put the popular cryptocurrency into a new breakout rally.
First, investors are shifting back into Bitcoin after a two-month trading range centered on the $100,000 price level. That price level serves as a psychological resistance price given its round numbers.
The trading range served as what technical analysts refer to as a “healthy correction”. Any asset that spikes as high and as quickly as Bitcoin did following the election needs to either consolidate or correct. The fact that Bitcoin consolidated is a feature of the health of it’s long-term trend.
Second, investors are preparing for the inauguration of President-elect Trump on Monday by buying Bitcoin.
The incoming administration’s view of Bitcoin has been positive even going so far as to suggest that the United States would begin stockpiling a reserve of the cryptocurrency.
Finally, investors are shifting back into rally mode as they are returning to riskier assets.
The last two weeks have seen a massive pullback in risk-taking assets such as small cap stocks and cryptocurrencies. This is often a sign that markets are near relative tops.
That sentiment has changed this week as investors are markedly moving back into higher volatility assets such as bitcoin.
The combination of these three drivers and a break above $105,000 is likely to trigger another short-term surge in Bitcoin prices as investors once again get that “Fear of Missing Out” feeling.
Watch for Bitcoin to target a price of $120,000 for its next move.