Over the past 24 hours, Bitcoin has surged 4% and currently trades around $57,313 at the time of writing. Over the last seven days, Bitcoin has surged more than 18%.
Bitcoin is on the cusp of starting another rally towards a new all-time high before a possible sell-off by the end of 2021. Bitcoin's price action is reminiscent of what happened in late 2017. The only difference is that $20,000 has now become a bottom, a level that excites the bears and those willing to buy the asset at a discount.
Potential investors should be wary of this rally, and here's why.
SEC's Bitcoin-ETF Approval Fuels Bullish Sentiment
The potential of SEC approval of a Bitcoin-ETF in the US has had the bulls celebrating. This is a long-standing and highly coveted factor, which can positively affect sentiment.
But, if the regulator continues to delay the launch of this instrument, it could lead to profit-taking.
Bitcoin's dominance index is showing gradual growth and is now at 45.8%, reflecting the propensity of market participants to invest in the market leader.
In such bullish cycles, Bitcoin is often almost the sole beneficiary of financial flows. At the same time, alternative cryptocurrencies attract increased demand when the next phase of the rally ends, after which a broad correction can begin.
Nevertheless, there are factors causing bullish sentiment for altcoins as well. For example, movie theatre chain AMC Entertainment Holdings (NYSE:AMC) is starting to accept Dogecoin as payment for tickets.
Indeed, this is another way to attract attention to movie theatres at the expense of the crypto hype. Hardly anyone will actively use this method of payment. However, everyone wins in the end, as the DOGE coin rallied.
At the same time, the US Senate voted for a temporary increase of the national debt limit, causing positive sentiment for the stock market.
Since Bitcoin now actively correlates with what is happening in the traditional financial market, it is reasonable to expect that the coin will not sell off and crash if a whale decides to dump their BTC holdings.
Bitcoin and the crypto markets' near-term prospects will depend on how successfully market influencers manage to "sell the idea" of starting a broad and large-scale crypto market growth.
We don't see any significant fundamentals right now, and of course, in many ways, the market is again facing manipulation, and buying Bitcoin at these price levels is a dangerous decision.
We can say with relative certainty that by the end of 2021, we will see new ups and downs in the crypto market, with the rich getting richer and the poor getting poorer.