You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

Bitcoin’s Taproot upgrade a prelude to next move up

The last time a technical upgrade this important happened, Bitcoin traded at $4 000.
The series of upgrades allow for greater privacy, cheaper transaction costs and improved smart contract functionality. Image: Akos Stiller/Bloomberg

Bitcoin’s 16% pull-back this week after setting new all-time highs is likely a precursor to another parabolic run-up in price, according to research by DecenTrader.

“As we attempt to break out of the previous all-time high from May this year, it is setting up the prospect of a potential parabolic run-up as we saw in the late stages of the previous bull runs,” says DecenTrader.

Moneyweb Insider Gold

Join heated discussions with the Moneyweb community, and get full access to our market indicators and data tools while supporting quality journalism.

R63/month or R630/year

SUBSCRIBE NOW

You can cancel at any time.

Bitcoin recently had its first major technical upgrade in years as Bitcoin Taproot was rolled out. Taproot is a series of technical upgrades allowing for greater privacy, cheaper transaction costs, improved smart contract functionality and the ability to scale using the Lightning Network.

These upgrades allow certain information on the Bitcoin blockchain to remain private, such as the conditions under which Bitcoin may be redeemed for spending.

Read:

Bitcoin price in USD over one month

Source: CoinDesk

The last time Bitcoin had such a major upgrade was the Segwit upgrade in August 2017, which made the Bitcoin blockchain more secure and scalable.

“At that time the price of Bitcoin was at $4 000, it then went on to rally up to nearly $20 000 in the following four months,” says DecenTrader.

“Will we see a similar rally this time around? Given how bullish many macro indicators are looking right now, and the rush of new money entering crypto, it is certainly possible.”

Bitcoin’s late November pull-back in price came as volumes remained muted and sellers took advantage of high prices to realise gains. The Relative Strength Index (RSI) on the daily chart is now in oversold territory, which is a reliable trigger for buyers to re-enter the market.

If the Bitcoin (BTC) price slips below $57 000, the next target would be $53 000, which is the 100-day moving average.

BTC is still on to run to $85 000 to $90 000 in the coming weeks after ‘trapping’ leverage traders, says DecenTrader. Leveraged traders entered the market on BTC’s new all-time highs and got immediately burnt as the price rally fizzled, forcing them to liquidate their positions.

Bitcoin in USD and Relative Strength Index

Source: Coinbase

Another bullish indicator is the number of “active addresses” relative to price change, which is effective in identifying broad periods where BTC is over- or undervalued.

The indicator has retraced in recent days, representing a precursor for a bullish run-up in price, similar the one we saw at the start of the year.

The rate at which BTC is mined is halved every four years, and that is traditionally followed by a parabolic run-up in price.

The last ‘halving event’ was in mid-2020 and though followed by a substantial price increase, it came nowhere near the parabolic runs experienced in previous halvings, which may be a signal that BTC’s recent run-up in price is just the beginning of a far larger move.

Listen to Ciaran Ryan’s interview with Luno’s Africa GM Marius Reitz:

AUTHOR PROFILE

CRYPTO VIDEOS

COMMENTS   0

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: