Twitter boosts Bitcoin by allowing tips to its users in the cryptocurrency
Over the last few weeks, we have seen volatility return to the world of digital currencies. Bitcoin’s price suffered a series of ups and downs, after it became legal tender in El Salvador and Twitter confirmed it would be one of the currencies accepted in their new “tipping” feature.
After what seemed to be a historic moment for Bitcoin, and the revolution it represents, following its acceptance as legal tender in El Salvador, its first day became a day of volatility and uncertainty which triggered a strong general downward movement in the cryptocurrency market.
During the sessions prior to becoming legal tender in El Salvador, Bitcoin had experienced a strong rebound that led it to trade again in an area close to 53,000 USD. However, after the technical problems which arose when the Central American country launched this project, Bitcoin suffered a strong setback that led to a strong bearish candle with a daily range of more than 10,000 USD between the high and low of the session.
This strong movement triggered strong generalised downward movements of close to 20% in some cryptocurrencies. Bitcoin, Ethereum, Litecoin and Ripple closed the session with declines of 11.19%, 12.84%, 18.90% and 19.18% respectively.
After a couple of weeks of uncertainty, the price returned to fight for its 200-session moving average in red, breaking downwards and momentarily reaching the 50% Fibonacci retracement level and 40,000 USD per Bitcoin, where it seems that the price has finally found support to start a new upward momentum.
This momentum is being supported by good news from Twitter. The company recently confirmed that Bitcoin will be one of the currencies accepted in its "tipping" feature, which went into testing last May. This function allows content creators to obtain income and payments from their followers for the tweets they publish on the social network site.
If we look at the daily chart of Bitcoin, we can see that, after the technical problems experienced by El Salvador in the implementation of Bitcoin as legal tender, the price made a strong downward movement which led the price to lose $40,000 in the middle of this week.
The area between its 200-session average in red and the $40,000 level is currently its main support level. As long as the price is able to hold this level the overall sentiment will remain positive. The loss of this support level would open the door to a further correction which could lead the price to look for its yearly lows around the $30,000 level in the lower red band.
On the other hand, the price has to face several resistance levels and it seems that its short and medium-term moving averages (white and orange) could make a bearish crossover. We should be very attentive to the behaviour of the price at this important level, as a failure to break upwards could take the price back to the monthly lows.
A bullish break of this first resistance level could cause the price to recover some of the lost ground and continue its search for the $50,000 level. Although, as long as the price does not break above its downtrend line, we cannot expect a strong upward move in the short/medium term.
Evolution of the last five years:
- 2020: 302.3%
- 2019: 94%
- 2018: -73.2%
- 2017: 1337.7%
- 2016: 124.1%
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