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Markets Report: Bitcoin Adds 20% in Hours as Elon Musk Unleashes Trading Frenzy

The power of memes fuels a Bitcoin rally as anger boils over regarding retail investors’ punishment for short squeezing stocks

Bitcoin has seen one of the more logic-defying weeks of its 12-year existence, and the trend seems far from over—what could be next?

In as much a transformative week for sentiment as for the BTC price itself, Bitcoin has gone from plumbing monthly lows to setting its sights on new all-time highs. 

Modern Consensus recaps what led Bitcoin to its current position over the past week and considers what might lie in store for the coming days. We also publish a markets outlook every Monday, the latest edition of which you can find here.

This week in Bitcoin: From rags to riches

Setting the tone for much of the past few days, Bitcoin began the week in the shadow of another asset, Ether. The largest altcoin by market cap had little time for the lackluster price action displayed by BTC/USD, and instead bulls seized an opportunity to deliver new historic all-time highs of $1,475.

Other altcoins also saw gains, but Bitcoin failed to take advantage of investor willingness and continued to linger towards the lower end of its trading corridor between its own all-time highs of $42,000 and support at $30,000.

Tuesday saw a fresh attempt to break out higher, but progress stalled when BTC/USD saw rejection at $35,000. A downtrend then set in, lasting three days and including a dramatic few hours in which $30,000 briefly disintegrated.

While support soon reemerged, sentiment was firmly in favor of a retest of lower levels, with theories including Bitcoin falling to meet its 21-week moving average at around $25,000 in the mid term. 

Amid the comparatively uneventful price activity, however, a strange phenomenon began unfolding on traditional stock markets. The short squeeze of several U.S. equities — which soon became a debacle and then a battle between consumers, regulators and exchanges — is still raging as the true nature of how legacy markets operate becomes clearer to lay investors.

As GameSpot, AMC and others quickly put in extraordinary moves, Bitcoin stayed almost unaffected, even as the same group of investors turned its attention to Dogecoin and produced a similar impact.

On Friday, however, that all changed. Thanks to a catalyst in the form of SpaceX CEO Elon Musk making “Bitcoin” the only word in his Twitter biography, $30,000 retests were left in the dust.

The move was eerily timely, finally vindicating those who championed Bitcoin as the decentralized “safe” version of stocks shut down due to their own success a day earlier.

As of press time, BTC/USD is still not done, hitting highs of $38,600 after climbing from the bottom of its trading corridor to the top in a matter of minutes.

BTC/USD gets an injection of meme-based euphoria. Source: TradingView

Eyes on new all-time highs

Musk himself is well known for trolling cryptocurrency users, using Twitter to give infamously mixed messages about his real feelings on Bitcoin and various altcoins. A pseudo-endorsement of Dogecoin over Christmas nonetheless sparked a dramatic price surge.

While it remains unknown whether Musk is genuinely considering buying Bitcoin or even leaving his biography as it stands, the move in itself was more than enough for many of the cryptocurrency’s best-known supporters.

“Elon Musk, literally bought the #Bitcoin dip,” popular Twitter account Documenting Bitcoin summarized in one of several posts about Friday’s market action.

Looking at fundamentals, meanwhile, trader Scott Melker saw cause to be highly bullish. 

“The double bottom breakout is now confirmed. Patterns rarely hit their targets, but this one ‘should’ take $BTC to 41k or so,” he forecast, describing Musk’s input as a “little nudge.”

Measured as ever still was fellow trader Michaël van de Poppe, who nonetheless could not discount the idea of a new Bitcoin all-time high emerging in the short term.

“#Bitcoin breaks through $34,000-34,500 and runs towards the next level at $37,000. If $34,000 flips & $37,000 breaks I’m assuming we’ll test the all-time high and could go towards $45,000,” he told Twitter followers. 

“Still expecting a corrective February regardless.”

Retail investors are facing the same problems investing in cryptocurrencies on major gateways as with stocks, the latest reports claim, thanks to Robinhood restricting access and Coinbase suffering yet more characteristic system outages.

“Telling Robinhood customers what they can and can’t do with their money is the best advertisement for bitcoin,” Saifedean Ammous, author of popular book “The Bitcoin Standard,” responded.

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.