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Bitcoin’s bullish fundamentals continue to overshadow its bearish technicals.
The last week saw the cryptocurrency on a tear even as it traded way above its actual current rates. It established another year-to-date high — and retested a three-year peak — at $18,980. Meanwhile, its momentum oscillator, the Relative Strength Indicator, continued to alert about its “overbought” signals.
Bitcoin RSI remains overbought for weeks, anticipating massive downside corrections. Source: BTCUSD on TradingView.com
The incredible uptrend took place without concrete hype. A mere check on the keyword ‘bitcoin’ on Google Trends shows no booming number of searches. In comparison, Bitcoin’s previous bubbles towards its all-time high levels in 2013 and 2017 had the Google searchers on a tear.
That somewhat explains the current price rally is institutional, i.e., fewer investors with big bags of capital to buy Bitcoin. A California-based investment firm provides evidence about how the world’s biggest payment firm is driving the upside moves.
PayPal is the New Whale
In a report published this weekend, Pantera Capital claimed that PayPal is buying most newly-mined Bitcoin units — roughly 70 percent of all. Last month, the fintech giant launched a crypto store on its existing US platform, thereby enabling its 300 million users to store, sell, purchase, and spend Bitcoin and other cryptocurrencies.
“PayPal’s crypto infrastructure provider is Paxos,” explained Pantera. “Before PayPal integrated crypto, itBit, the Paxos-run exchange, was doing a fairly constant amount of trading volume. When PayPal went live, volume started exploding. The increase in itBit volume implies that within four weeks of going live, PayPal is already buying almost 70% of the new supply of bitcoins.”
Implied PayPal Bitcoin Purchases (via itBit Volume). Source: Pantera Capital
Together, PayPal and its rival Square’s CashApp are now buying more than 100 percent of the newly-mined Bitcoin. That leaves the cryptocurrency in a supply deficit — against its booming retail and institutional demand.
So it appears, the PayPal narrative alone is enough to push the Bitcoin price upward by $2,000 this week.
Bitcoin At $20K
This weekend’s small downside correction has shown Bitcoin’s ability to hold itself against two extremely assertive sell-off attempts. For instance, on Sunday, the BTC/USD exchange rate fell to as low as $17,610, only to get overturned by a solid buying sentiment later.
The pair recovered back to close the session at $18,437. It was trading near the same level on Monday while targeting $18,500 as its flippable support/resistance.
Bitcoin risks correction after posting seven weekly gains in a row. Source: BTCUSD on TradingView.com
The PayPal FOMO could allow Bitcoin to hold $18,500 as support for its next upward leg towards $20,000, its record high with a huge sentimental value among traders. The sooner the cryptocurrency hits the level, the early it would correct lower thanks to its overheated RSI.