bitcoin (B T c) on Wednesday recorded its best daily performance since February 8, the day Tesla announced it had added $1.5 billion worth of BTC to its balance sheet.
The flagship cryptocurrency rose 11.98% to $37,573 after El Salvador President Nayib Bukele passed legislation to approve it as legal tender. In short, the Central American nation will now be able to price goods and services in BTC and even accept cryptocurrencies for tax payments.
Meanwhile, Bukele clarified that his government will not impose a capital gains tax on bitcoin investors. He also announced that El Salvador will use up excessive volcanic energy Tesla CEO Elon Musk to mine the cryptocurrency, weeks after ending bitcoin payment support over its alarming carbon footprint.
I have just instructed the chairman @LaGeoSV (our state-owned Geothermal Electric Company), to formulate a plan to offer facilities for #bitcoin Very cheaply mined, 100% clean, 100% renewable, 0 emissions energy from our volcanoes
It’s going to grow fast! pic.twitter.com/1316DV4YwT
— nayibbukele (@nayibbukele) June 9, 2021
Bearish sentiment prevails
But according to Lenard Neo, head of research at Singapore-based crypto investment fund Stack Fund, El Salvador’s benchmark move to legalize bitcoin as an upcoming store-of-value failed to generate a rapid response from “smart” investors.
The Chartered Financial Analyst said Wednesday’s bullish sentiment in the bitcoin market remained weak even after the El Salvador news. The popular Fear and Greed Index pointed to “extreme fear”, while contracts for bitcoin derivatives from Smart Money were net low during BTC/USD’s 11.98% rally.
Trading activity is also looking weak, Neo said:
“We should not expect a significant impact on bitcoin for a country with a per capita GDP of less than 7% of the US, whose economy suffered the worst crash in decades last year.”
Ben Lilly, analyst at Jarvis Labs, further anecdotes provided Why bearish continuation is still a real risk even as bitcoin posts its best daily candle in months. He flashed on the latest spike in BTCUSD shorts, a dataset that records the number of margin short positions on the Bitfinex exchange, the same day the pair rallied in the spot market.
Dramatic rise in BTCUSD shorts Bitcoin usually leads to a fall in the spot rate. Conversely, a crashing BTCUSD shorts signals an imminent price rally.
Pablo, Whale, etc.
Meanwhile, Lily also brought it back.”pablo“In analogy to their recession.
The analyst envisioned the make-believe character to refer to a bitcoin wallet owner last year who, according to him, played a major role in dumping and pumping the BTC/USD markets on various occasions, including the March 2020 crash.
Lilly warned that the anonymous trader still sits on top of a bitcoin stash that he may dump later. she added:
“Pablo doesn’t look completely ready. He’s been making periodic moves since Monday and still has another round sitting in the chamber.”
The CVD indicator adds to the bearish bias of the bitcoin market. The indicator shared by Lilly indicates an increase in volume between $100,000 and $10M in bitcoin sell orders.
Lilly added that market movers are not behind the El Salvador bitcoin price pump, noting that “they are moving value without weight.”
“Wherever it lands, it lands.”
Meanwhile, the Bitcoin Dominance Index, a gauge to measure the strength of the benchmark cryptocurrency against its rival crypto, rose from 41.28% to 44.23%.
The upward move suggested that traders offload their altcoin positions to seek opportunities in the bitcoin market, especially as the cryptocurrency became an official fiat currency in El Salvador.