Bitcoin, the world’s largest cryptocurrency, jumped on October 1, 2021, in a matter of minutes to hit its biggest daily gain since July. Other digital currencies surged in a shock rally that followed the largest monthly decline since May this year.
The largest cryptocurrency by market value rose as much as 10% to hit $47,884 before trimming gains.
Ethereum, Litecoin, and EOS also jumped. Bitcoin had slumped 7.6% in September amid concerns about increasing regulatory pressure in China and the U.S.
The rise of the digital currency also inspired other crypto-related stocks to surge on Friday, including Bit Digital Inc, Marathon Digital Holdings Inc, and Riot Blockchain Inc.
Why did Bitcoin rally?
Bitcoin’s jump has left traders speculating why. But all fingers seem to be pointing towards the Federal Reserve Chair Jerome Powell’s comments on Thursday that the central bank has no intention to ban cryptocurrencies like Bitcoin. He, however, said stablecoins might be appropriate for regulation.
Recently, governments and investors across the world have been adopting the world’s largest cryptocurrency.
Last month, El Salvador made Bitcoin a legal tender while other countries like Paraguay, Argentina, and Panama have shown interest in adopting the digital currency. Weeks later, Cuba followed in El Salvador’s footsteps by permitting cryptocurrency use in commercial payments.
Bitcoin has, however, faced a lot of backlash from countries like China that have vowed to crack down on the crypto as well as banning crypto trading and mining in the country, causing Bitcoin to crash.
Powell’s comments on not banning cryptocurrency in the United States saw Bitcoin surge to hit new heights.
Despite slipping in September, the digital coin posted a 25% gain in the third quarter of this year, despite a 41% drop three months prior.
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Where could the crypto go next?
The swift move took Bitcoin above its 20, 50, and 200-day moving averages in one quick pass.
Looking at the charts, Bitcoin broke the major resistance levels and also closed the daily candle above $48,000 which is bullish. The next resistance is the $48,400-$49,000 area and after that, the $51,000 level. Bitcoin’s support level for now is $46,500-$46,800 and $45,000.
The crypto needs to hold above $45,000 to remain bullish as a close below $45,000 will be bearish. A close above $53,000 is extremely bullish.
Despite the upward sentiment shift in Bitcoin, traders need to be cautious as sudden accelerating price action can hastily unwind.
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