Why does the price of Bitcoin rise?

Today, the prezzo di Bitcoin has risen above $107,000.

It is not a particularly high figure, but considering that last week for a moment it had also dropped below $101,000, the rebound is quite evident.

It is worth noting, however, that the current level has simply returned in line with that of the second half of May, after having marked new all-time highs above $109,000.

Why does the price of Bitcoin rise?

It is not very easy to explain precisely why the price of Bitcoin is rising today.

There are probably at least three dynamics at play.

The first could simply be that of a rebound in progress after last week’s decline. That decline, in fact, ultimately proved to be unjustified, therefore, with the reasons for a drop below $101,000 no longer present, not only is it rebounding in recent days, but it is actually returning to the levels prior to that decline.

The decline had started on May 29th right from above $107,000, so it might just be recovering the previous levels.

The Dollar Index

A second dynamic that might be in play is the one related to the Dollar Index (DXY).

DXY measures the strength of the US dollar against a limited basket of other global currencies, and since President Trump took office at the end of January, it has fallen from 110 points to less than 99 points.

The fact is that, in the medium term, the trend of the price of Bitcoin tends to be inversely correlated with that of the Dollar Index, although not in a strictly linear way.

Yesterday, with the traditional exchanges closed, the crypto markets seemed to be starting to price in a resumption of the decline of the Dollar Index.

It should be remembered that the decline of DXY that began at the end of January had stopped at the end of April, when a period of dynamic lateralization around 99 points began.

99 points is also more or less the current level of the Dollar Index, but many analysts argue that it could start to fall again.

Given that Trump’s foreign trade policy based on tariffs is not yielding great results, it seems that the US president has only one solution left to reduce the trade deficit, which is to devalue the dollar.

If it succeeds, the Dollar Index should start to decrease significantly, and this could help the price of Bitcoin to rise. It is possible that since yesterday the crypto markets have started to price in this hypothesis, which is absolutely uncertain in the current state of things.

The predictions on the price of Bitcoin (BTC)

To all this, it should be added that since yesterday positive hypotheses have begun to circulate regarding the trend of the price of Bitcoin in the short, or medium-short, term.

The hypothesis is that market cycles at this moment might converge towards a mini-rally.

In this case, however, it should be highlighted how the current price levels are very close to the historical highs, so a mini rally, however brief, could be sufficient not only to register new highs, but also to trigger FOMO.

The FOMO (Fear Of Missing Out) is that emotion that drives especially small retail investors to purchase an asset even at a high price because they believe it can rise further.

In case of FOMO, the price of Bitcoin could rise well beyond $109,000, with the potential to reach even $120,000 in the medium-short term.

However, since it is an emotion, it is difficult to predict, so this hypothesis in the current state of things still seems only theoretical. In fact, the signals emerging from analyzing the crypto markets and the global situation do not suggest at all that FOMO is being triggered.

However, in the case of breaking the psychological threshold of $110,000, emotions could quickly shift towards the positive, and from there to the arrival of FOMO, the step could theoretically be short.

The good situation

The fact is that, despite the absence of particularly positive signals, the overall situation at this moment seems good.

It is understood, for example, from the level of the S&P 500 index, which is the main index of the traditional USA stock exchanges, having risen to only -2.5% from the historical highs.

The problem of April, related to Trump’s tariffs, seems to be slowly subsiding, so much so that some analysts claim that in the end many of those tariffs will be reduced.

Furthermore, there is always the hypothesis that in the end the only realistic and effective solution is the devaluation of the dollar, and this could easily drive up the prices of almost all financial assets.