Bitcoin Price Surges To $12,400 – What's Next?

Bitcoin went as high as $12,400 and closed at $12,298 Monday, marking the first time the benchmark cryptocurrency went above $12,000 this year. Analysts are expecting more upside amid the global rally in the wider markets.

Bitcoin was rejected at $12,000 the first two times it tried to go past the mark in the last 17 days. On both instances, it was met with intense selling pressure. What followed was an ascending triangle formation, a bullish indicator that, when breached, triggered the rally Monday.

The benchmark cryptocurrency is currently trading at $12,344.

The narrative around Bitcoin, similar to that of gold, points to its price resilience as a possible hedge to inflation, Bloomberg reported. “Negative real yields and the monetary stimulus/spending has driven investors to seek out inflation hedges such as gold,” METACO’s vice president of sales and business development, Seamus Donoghue, told the news outlet.

Both the shiny metal and the benchmark cryptocurrency have limited supply but while the former had thousands of years as a store of value, the latter just recently found growing institutional acceptance. Macro investors like Raoul Pal and billionaires like legendary hedge fund manager Paul Tudor Jones have publicly backed Bitcoin, with the latter saying the cryptocurrency reminded him of gold in the 1970s.

This institutional acceptance, Bloomberg previously reported, would allow Bitcoin to mature as an asset class.

As the best performing asset in 2020, Bitcoin has finally continued the momentum it had just before the March 12 crash and is now up 156% since the yearly low. The next challenge for the benchmark crypto is going past $13,800, the 2019 high. Several indicators are suggesting further upside. The Relative Strength Index (RSI) is at 70, just below overbought levels, indicating that there’s still room for price appreciation.

Options trader William Purdy said investors should look at data in the options market to get an estimate on where Bitcoin’s future price will be. "12,000, $13,000, $14,100 and $16,000 are the spots with the greatest open interest so the price is likely to settle on these as upcoming support/resistance," he told Coindesk.