” This is how the game is played: Money and Power are transformed by the dominance of information and its social distribution .”- Coindesk

The answer to “What is the main factor that dominates the rise and fall of Bitcoin?”  may now be “attention economy”. This is not a new idea. On the contrary, the concept of attention economy was first proposed by Herbert Alexander Simon, a famous American scholar, computer scientist, and psychologist, in 1971.

Regarding the attention economy, Simon said, in 1969: “Now when we speak of an information-rich world, we may expect, analogically, that the wealth of information means a dearth of something else — a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention, and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.”

Simply put, in the era of information flooding, whoever can get the “scarce resources”-the attention of the consumers is the winner. At this point, the emerging asset Bitcoin has undoubtedly made great achievements.

On January 3, 2009, the first block of Bitcoin (the Genesis Block) was mined. However, given that Bitcoin was not recognized by the mainstream at the time, its market price value was zero. Subsequently, Bitcoin ushered in its first bull market in 2017 and hit the highest price of $19,498.68. After a year of decline below $5,000, Bitcoin fluctuated between $3,500 and $11,800 during the third quarter of 2019 to 2020. From the fourth quarter of 2020 to the present, as Bitcoin has gradually received the attention of large institutional investors and listed companies with high market capitalization, Bitcoin ushered in a second round of bull market, with a peak price of $48,886.95, which is 150% higher than the peak in 2017. The specific factors driving Bitcoin’s recent rise include:

• Grayscale Bitcoin Trust Fund (GBTC) management scale has skyrocketed. According to the latest data from the statistical platform Bitcoin Treasuries , GBTC holds the most bitcoins – 649,130 ​.
• The automotive giant Tesla claimed to have purchased $1.5 billion in bitcoin and promised to accept bitcoin as a payment method for purchasing its products.
• PayPal and MasterCard to provide cryptocurrency payment services. The latter expressed its intention to officially open the service at the end of this year .
• The oldest bank in the United States – Bank of New York Mellon – announced that it will provide customers with digital currency storage and transfer services.
• The market’s expectation of being bearish on the US Dollar also helped to increase the US Dollar priced Bitcoin.

It is worth noting that as Bitcoin has gradually attracted people’s attention, governments in various countries have also stepped up their supervision. What is the trend of cryptocurrency in the future? We will have to wait and see.

Technical analysis:

The weekly chart shows that BTCUSD recorded a 28.54% increase last week and stabilized above the $45,000 level. From the perspective of technical indicators, the MACD double line expanded upward on the 0 axis; the relative strength index (RSI) is in the overbought area (81.49); the Stochastics formed a golden cross, and its fast line also touched the overbought area (86.69).

From the daily chart, the recent resistance is the upper channel trend line resistance, the daily FE61.8 ($49,095) and the weekly FE61.6 ($52,270). If the breakout is successful, the asset may continue its upward momentum and test longer -term resistance from $61,700 to $66,840.

In terms of support, recent key levels are seen at $38,900, channel trend line support, and the low of $28,710 on January 21 this year .

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Larince Zhang

Market Analyst

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