Bitcoin investors should get excited as the leading cryptocurrency trades near $25k. It is a new high of the year and an important development for Bitcoin for at least three reasons.
First, with the recent move, Bitcoin’s return for the year is close to 50%. Considering we’re only in the middle of February, that’s no small feat.
Secondly, Bitcoin broke the previous high while maintaining a series of higher declines. This indicates more strength.
Third, the recent rally came in overall divergence with the US dollar. The dollar rallied after last Tuesday’s inflation report, as evidenced by USD/JPY trading above 134 or EUR/USD trading below 1.07. But Bitcoin did not follow the same path, diverged, and the price exploded higher.
All of this puts Bitcoin’s recent rally in a positive light. Moreover, if we add that bitcoin’s climb near $25k invalidated the head and shoulders pattern, the picture is more bullish.
BTCUSD Chart by TradingView
What needs to happen for Bitcoin’s rally to continue?
The above chart shows Bitcoin’s performance compared to the EUR/USD pair. While Bitcoin has gained 49% since the beginning of the year, EUR/USD is almost flat.
Bitcoin’s rally may continue if EUR/USD reverses its recent losses. When EUR/USD fell from 1.10 to 1.07, Bitcoin fell from $24k to $21.5k. Now that Bitcoin is rising while EUR/USD has not, this could be an indication that Bitcoin is driving USD weakness.
Therefore, Bitcoin investors may see more gains if EUR/USD reverses its recent losses and returns to 1.10, the highest level for this year. If that happens, one should not be surprised to see bitcoin trading near $30k or more.
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