Bitcoin just jumped above $47,000 and could be on a straight path to $50,000, analysts say

Published Fri, Aug 13 20215:31 PM EDT

Bitcoin flew above $47,000 Friday afternoon to round off a week of optimism in the crypto markets following a bearish few weeks and a recent battle in Congress over a provision in the infrastructure bill. The cryptocurrency traded as high as $47,819 at 4:05 p.m. EST, about 7.5% higher on the day. It spent most of the day hovering above $46,000, where it began the week before pulling back slightly in the past couple days. Bitcoin bottomed out a month ago in the $30,000 level around the time China cracked down on crypto mining operations, but has rallied ever since. "Bitcoin broke above key resistance around $42,000 earlier this month, and is now consolidating above its 200-day moving average, which is a good sign that it's likely to go higher," said Baycrest Partners' Jonathan Krinsky. "Typically, if it's going to be rejected at a moving average, it happens pretty quickly like it did back in May. It needs to clear $47,000, its April low, which should open the door to $50,000 to $53,000." Oppenheimer's Ari Wald said he sees range-bound behavior in bitcoin's chart, with the 200-day moving average starting to slope sideways, rather than a trend. "In terms of that range, bitcoin successfully tested support at its January low of $31,000 in July, and its recent rally above its June peak (now support at $40,000) indicates trading conditions are higher," Wald said. "Looking ahead, as long as $40,000 holds, we think a test of $59,000 resistance," where it peaked in May, "is reasonable." Though many feel a tide is turning for bitcoin, Cornerstone's Carter Worth said he wouldn't make any moves on it. "I wouldn't do anything to it, I wouldn't short it and I wouldn't buy it. The truth is there's no discernible trade here," he said. "I call it a pair of twos – it's not a particularly strong hand." He noted that bitcoin shows a 50% retracement of the peak to trough decline and exactly a 50% recovery of the preceding loss. "You're kind of now in no particular position," he said. "No one's in control, the bears and the bulls are standing off. You'll deal with that congestion for a long time." David Grider, head of research at Grayscale Investments, noted that cryptocurrency as an institutionalized asset class has received a lot of capital flow into crypto funds this year and particularly over the summer. For example, Andreessen Horowitz announced a new $2.2 billion cryptocurrency-focused fund that'll invest in crypto networks and companies. Other money managers waiting to deploy some cash have been sitting on the sidelines until recently. "As the market has started to rally, folks who have that dry powder are now at a 'buy the dip' mentality," Grider said. That rally continued even after crypto's week in Congress, when a provision pertaining to virtual currency tax reporting held up the passage of the infrastructure bill for days as lawmakers scrutinized and debated the role of crypto entities in the ecosystem and in the bill. "Crypto has kind of become a political entity and industry with enough lobbying power to have its voice and views heard in Washington," Grider said. "That's really bullish for de-risking large parts of the industry." Macro factors have also been accommodating, he added. Grider noted that the stock market remains strong, high-yield credit is doing well, and the default rates are low. Bitcoin's rally has so far coincided with a broader risk-on rally, probably due to how much cash is sitting on the sidelines – about $5 trillion, globally, he said, citing Goldman Sachs.

An illustration showing the cryptocurrency bitcoin with a price chart in the background.

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