Bitcoin Ripped Higher Amid Growing Signs That Cryptocurrencies May Have Bottomed

Bitcoin, Ethereum, Cryptocurrencies

Cryptocurrencies like Bitcoin and Ethereum ripped higher yesterday. After months of weakness, there could be reasons to be optimistic on the market.

This article will consider several key points about Bitcoin and Ethereum. It’s not intended as a recommendation, but as a survey of how much things may have changed in recent sessions.

The first potentially positive things about Bitcoin and Ethereum this week is their breakouts above their 50-day moving averages. This popular trend indicator has been useful in the past. For example, it marked the beginning of Bitcoin’s rally in October and its conclusion in April.

Second, both cryptocurrencies tested and held long-term lows on July 20. Bitcoin slid below $30,000 for about 25 hours before rebounding, while Ethereum slid beneath $1,800. Both levels had relevance as lows in May and June, which suggest support held.

Third, sentiment has been very bearish.’s Crypto Fear & Greed Index recently fell as low as 10, the worst reading since March 2020. (Bitcoin increased almost 1,000 percent in the 14 months following that last trough.) and Bitcoin

Another big news event was over the weekend, when bloggers noticed (AMZN) was advertising for someone to lead a “Digital Currency and Blockchain Product.” The initiative would apparently focus on new payment services. A company spokesman increased the excitement by saying that AMZN wants to launch the service “as soon as possible.”

The news helped break a string of bearish developments for digital currencies like Bitcoin. The negativity began on May 13 after Elon Musk said Tesla (TSLA) would stop accepting Bitcoin as a payment because of its energy usage. It worsened the following week as China said banks shouldn’t participate in crypto-related transactions. The U.S. Treasury Department also called for stricter compliance rules.

Bitcoin, daily chart, showing key technical events.

That drove Bitcoin back under $30,000 for the first time since late January. Prices remained under pressure for the next two months but didn’t make significant new lows. Meanwhile, some positives started taking shape.

First, Ethereum accelerated plans to implement EIP-1559 (“fee burning”), which will reduce the supply of coins. The upgrade is now expected to take place as early as next week under the London Hard Fork. Developers plan to follow with a migration to “proof-of-stake” validation instead of the existing “proof of work” mining process. That will also reduce the creation of new coins. Combined, the events are called Ethereum’s “triple halving.”


Those changes could make Ethereum more useful and less abundant. More useful because fees will be lower and the network will be faster. Less abundant because of the one-two punch of fee burning and proof of stake. The bulls hope it will create a digital asset with surging demand and narrowing supply — a potentially powerful combination for prices.

Other positives have also emerged for the broader cryptocurrency space. One is the departure of coal-fired Bitcoin mining in China. Elon Musk thinks that will reduce its carbon footprint and could make TSLA accept Bitcoin as payment again.

Second, the Block estimated that yesterday’s rally forced the liquidation of $883 million of short positions. It’s reportedly one of the worst days ever for the bears, and could potentially turn sentiment in a more positive direction.

In conclusion, Bitcoin and Ethereum are still down more than 40 percent from their peaks. However there are several potential signs of a turn. Investors who’ve avoided cryptocurrencies lately because of their volatility may regain interest in the market.

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