Should I buy Bitcoin at $25,000?

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Should I buy Bitcoin at $25,000?

As we head into the final days of summer, we might be about to make a breakout for Bitcoin (BTC -1.16%). On August 14, Bitcoin briefly traded above $25,000 for the first time since June. Naturally, this excited Bitcoin bulls because all the talk about “buy the dip” throughout the summer it looks like it actually works. After nearly two months of testing the $20,000 resistance level, it now looks like Bitcoin might be ready for its next big test: $25,000.

So should you buy Bitcoin at $25,000? There are two key factors to keep in mind here. One is the overall psychology of the market. The other is the presence of key catalysts that could be lining up for sustained, long-term Bitcoin price growth. Let’s take a closer look at these two key factors.

The psychology of the market

Crypto markets, much more than stock markets, are driven by a mixture of intuitions, emotions, and instincts. Sometimes you can just “feel” the market is heading up. Combine all of this, and you have what British economist John Maynard Keynes described as “animal spirits”. It was his way of explaining how markets go up and down in times of uncertainty. It can be tempting to describe markets in a rational, data-driven way, but ultimately, human emotions matter. And right now, bull animal spirits are starting to reappear after briefly hibernating during the so-called “crypto winter” for the past few months.

Young smiling professional with mobile phone.

Image source: Getty Images.

To see all of this play out in the crypto markets, it is easiest to think in terms of resistance levels, which are simply key price targets. If a crypto can hit a price target, confidence and optimism reinforce that it can hit another price target, then another price target, and at some point you’re off to the races. And that’s what we could see now with Bitcoin, which has been testing the psychologically important price of $20,000 all summer. In short, it looked like Bitcoin bulls were going to capitulate, but no more. $25,000 is the new $20,000. And $30,000 will be the new $25,000. The longer you wait, the harder it will be to access an attractive entry point.

Here come the institutional investors

But wait, there’s better. This is because there is a rational and real economic factor that also has the potential to push Bitcoin higher. And that is the arrival of institutional money in the crypto market. Large pension funds, endowments, and foundations are eager to put some of their capital to work in the crypto markets. We can clearly see this with the agreement at the beginning of August between black rock (noir -4.21%) and Coinbase (PIECE OF MONEY -11.27%), in which BlackRock’s institutional and retail clients will now have access to Coinbase crypto products and services through the Aladdin wealth management platform. This is hugely important because BlackRock is the largest asset manager in the world, with over $10 trillion in assets under management.

And BlackRock didn’t stop there. A few days after the announcement of the Coinbase deal, it also announced that it was rolling out a private Bitcoin trust for its wealthiest US customers. The company also gave what can only be construed as an unqualified endorsement for Bitcoin: “Bitcoin is the oldest, largest and most liquid crypto asset and is currently the primary focus of our customers. in the crypto asset space.” Boo-yah! Add to that the fact that Fidelity Investments is making it easier than ever to invest your 401(k) plan in Bitcoin, and there are very strong signals that Bitcoin’s next phase of growth could be led by large institutional investors. .

An unforgettable month of September

This could end up being an unforgettable September. Bitcoin has fallen behind Ethereum (ETH -5.21%) for much of the summer, mainly because crypto investors were targeting The Merge and allocating their money primarily to Ethereum. The merger, which is a massive technology upgrade for Ethereum, is now scheduled for September 15. After this date, we could see a return to the traditional situation in the crypto markets: Bitcoin being the focus of investors’ attention, and Ethereum being a secondary option. This too will result in more money flowing into Bitcoin.

Sure, Fusion could end up being a nothing-burger. And, yes, the price of Bitcoin could just as easily jump to $10,000 as to $40,000. But September could also be the start of another long and sustained crypto rally in which Bitcoin will play a major role.

Dominique Basulto has positions in Bitcoin and Ethereum. The Motley Fool holds positions and endorses Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool has a disclosure policy.

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