The drop in Bitcoin (BTC) to less than $ 30,000 was short-lived as the top cryptocurrency found a new wave of support, including a $ 10 million ‘buy the dip’ moment from MicroStrategy.
Data from Cointelegraph Markets and TradingView show that strong flows helped raise BTC 4.92% to a daily high of $ 33,866.
With the prospect of the Biden government approving huge stimulus packages to help get the United States economy back up, talks about Bitcoin becoming a reserve currency are starting to surface again.
Although Bitcoin’s recent volatility has led some analysts to say that BTC is a cyclical asset rather than a hedge, recent price movements have caught the attention of retail investors who have shown renewed interest in cryptocurrencies in general.
Even the Bank for International Settlements has recognized that digital currencies can be used and the organization has outlined plans to launch a variety of central bank digital currency tests this year.
Now that Bitcoin’s fear index has changed from “extreme greed” to “fear”, some investors appear to be following Warren Buffet’s advice to “buy when there is blood on the streets”.
Institutional investors are concerned about future regulation
According to Chad Steinglass, head of trading at CrossTower, the Bitcoin correction may have been initially triggered by critical comments from the U.S. Treasury Secretary, Janet Yellen.
Before Yellen’s comments, Bitcoin was undergoing “post-correction consolidation” and “ranged between $ 34,000 and $ 38,000”, with traders “waiting to see which side of the range would be challenged or broken”.
Steinglass further explained that Bitcoin’s next steps will be determined by the actions of institutional investors. He said:
“$ 31,000 was a strong support pocket, so at least not everyone is selling. We will have to wait and see if that wall remains or if institutions continue to accumulate. If they do, the trend is likely to recover and continue. If they walk away hoping for more regulatory guidance, their lack of purchase flows will be strongly felt. “
Altcoins recover
Many of the top altcoins have also recovered well with this week’s correction. Polkadot (DOT) rose 7.09% to a daily high of $ 18, while Chainlink (LINK) posted a double digit gain and topped at $ 22.31. Tezos (XTZ) also saw an increase in interest, which boosted altcoin by 15% to $ 3.36.
The overall capitalization of the cryptocurrency market is now at $ 949.8 billion and Bitcoin’s dominance rate is 64.4%.