Bitcoin (BTC) is likely forming support above the $40,000 level en route to breaking the six-figure mark, according to Bloomberg commodities analysts.
In its latest “Crypto Outlook” report, Bloomberg says that traders thinking that Bitcoin is trading between a range of $30,000 and $60,000 may be caught off guard as BTC’s price action progresses.
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“Bitcoin is more likely forming a floor than a ceiling, which means range traders accustomed to $30,000-$60,000 may be disappointed. Since the start of 2021, the more tactically oriented had opportunities near the lower end twice and to sell for double around the upper end.
Our graphic shows this consolidation period may be ending, with the path of least resistance pointing higher. About 30% below the 52-week moving average has proven to be a good support reading. Bitcoin revisited this potential bottom in January for the first time since the 2020 trough.”
Looking at Ethereum, Bloomberg says that a dwindling supply of ETH could put upward pressure on the top smart contract platform as it attempts to break out of the $2000 – $4,000 range.
“Ethereum supply is less defined, but clearly in a downward trajectory, notably due to a protocol change in 2021 that burns coins. Ethereum is the foundation for revolutionary technologies like non-fungible tokens and crypto dollars. Bitcoin is well on its way to becoming the benchmark global digital collateral.”
Most stablecoins, which Bloomberg’s commodities analyst Mike McGlone calls “crypto dollars,” are currently based on the Ethereum network. This is another bullish factor for ETH, according to the analyst.
“Ethereum made crypto dollars possible, and the escalating use of the technology to transact greenbacks, support the No. 2 crypto’s price. Approaching $170 billion on Feb. 2, the market cap of the top six crypto dollars listed on Coinmarketcap is up about 5x from the start of 2021. That pace may slow, but we see little to stop what is billions of dollars of market cap from reaching trillions.”
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