Breathing Space for Bitcoin, Will It Rise Further?

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Junho Hwang] Bitcoin is consolidating in the $61,000 range after hitting its highest price in six months.

According to CoinMarketCap as of 12:45 PM on the 24th, Bitcoin is priced at $61,268.04. After reaching an all-time high of $66,930.39 on the 20th, Bitcoin appears to be taking a breather.

This recent surge was largely influenced by the launch of the first Bitcoin-linked exchange-traded fund (ETF), the ProShares Bitcoin Strategy ETF. In fact, this ETF invests in futures contracts and does not have a significant direct impact on Bitcoin’s price. However, it is seen as a product indicating Bitcoin’s gradual integration into the institutional framework, which has boosted investor sentiment toward Bitcoin. On its debut day on the New York Stock Exchange on the 19th, the ETF recorded a trading volume of $980 million (approximately 1.1549 trillion KRW), marking the second-highest trading volume ever for an ETF’s first day.

There is also analysis that growing concerns over inflation have renewed interest in Bitcoin as a hedge against inflation risks. JP Morgan stated in a recent report that "the ETF launch itself likely did not trigger a significant influx of new funds into Bitcoin." However, it explained that "the perception of Bitcoin as a better inflation hedge than gold has been a key driver of the recent rally," adding that "this has caused a shift of funds from gold ETFs to Bitcoin funds since last September."

However, due to the recent rally, Bitcoin has entered an overbought state, raising the possibility of a correction. Bitcoin’s Relative Strength Index (RSI) reached 71 on the 21st, entering the overbought zone. The RSI is a technical indicator where values above 70 indicate overbought conditions, and values below 30 indicate oversold conditions.

Nicholas Colas, co-founder of market analysis firm DataTrek Research, said, "Bitcoin tends to peak around major event periods," and recommended "an approach of gradually adjusting assets over several months or years."