Bitcoin and the entire crypto market have seen some intense strength throughout the past day, which has come about as a result of news regarding Square’s acquisition of Bitcoin worth $50 million that will be held on their balance sheets.
Investors and analysts alike have been viewing this rapidly growing trend as being highly bullish for Bitcoin, as corporate adoption could boost BTC’s technical strength and allow it to see significantly further upside.
The cryptocurrency is now on the cusp of breaking above a key technical level that previously sparked multiple selloffs.
If it is able to shatter this level, it could be poised to see some notable downside in the days and weeks ahead.
One trader is pointing to three factors that he believe suggest that upside is imminent for the cryptocurrency.
He notes that the floating supply is being rapidly chewed up by large buy-side orders – possibly stemming from other companies and large investors looking to gain exposure to Bitcoin. This could catch suppliers off-guard and cause them to re-enter their positions.
Bitcoin Rallies on News on Square Buying Bitcoin
Multi-billion-dollar public company Square – which is headed by Twitter founder Jack Dorsey – made headlines yesterday with their decision to purchase $50 million worth of Bitcoin to be held on their balance sheet as a reserve asset.
This news was significant and suggested that MicroStrategy’s unorthodox approach to storing their capital may be becoming a trend.
There’s not any explicit evidence of other companies doing the same, but it is important to note that private companies could be buying and holding BTC without having to announce it to anyone.
Analyst: These 3 Factors Could Drive a BTC Buying Frenzy
While speaking about what he thinks could drive Bitcoin higher in the near-term, one analyst pointed to three specific events that could indicate a move higher is imminent.
He notes that the circulating supply is being absorb by large buyers, which may cause sell-side suppliers to fomo back into their positions. Subsequent companies who want to purchase BTC will have to do so by pulling from a lower supply pool.
“A few thought on BTC here: 1. The float is being absorbed 2. The suppliers who introduced supply could be caught off sides and need to pick inventory back up 3. Each subsequent company will have to buy from a lower supply pool. We need a HH on 1D to confirm. Conditions are there,” he said.
These three trends could be what fuels Bitcoin’s next parabolic run, but it hinges on the possibility that more companies turn to BTC to be used as a reserve asset.
Featured image from Unsplash. Pricing data from TradingView.
