- Bitcoin’s value increased last week despite a lesser demand for it compared to the positive looking economic outlook of the US.
- The upward trend was mainly after the news broke about various corporations adapting to bitcoin and diversifying their assets into bitcoin, which fueled mass public interest in Bitcoin.
- This has turned Bitcoin into extremely overbought security, and it needs to be neutralized in the days ahead.
A bitcoin analyst, Yerevan, stated that Bitcoin performed two main roles during the past weeks. The first one was that it seemed like a more secure asset to the corporations, which could save their balance sheets from the devaluation of the US Dollar. The second was that the investor’s preference for buying Bitcoins in lieu of long term US treasury bonds showed that the investors are open to higher risk in terms of their investments.
The closing exchange rate of Bitcoin on 21st Feb 2021 was 18.13% higher than the previous week, which resulted in Bitcoin attaining the record high price of just above $58k, and the lowest trade was at $48,850.
Short Term And Long Term Predictions
There was an uproar in the market when Tesla declared to the SEC that it now owns Bitcoin worth $1.5 billion, which on their balance sheet, takes up around 8-10% cash reserves.
This fluttering news divided the financial markets into the sides of support and criticism. Nouriel Roubini, an economist, said that the companies should not do what Tesla did because Bitcoin has no true value, and it just thrives when people invest in it. Many analysts made the same call, while others supported Tesla’s decision.
The analysis aside, Tesla made a huge $1 billion return on its investment in Bitcoin, which is larger than the sum of profit it made from its automobile sales in the past year. This served as a trusting point for other corporations.
Overbuying of Bitcoin
Bitcoin’s market price was higher than its value at the end of last week, shown by the overbuying signals, which led to a decrease in its price of about 4.22% at the start of this week as people started selling in order to make a profit.
The pair of BTC and USD should lower further until it starts going back up but its value going up straight away is also a possibility. The bond yields and inflation could be factored in the plummeting or an increase in the price of Bitcoin in the future.