Investing.com – The price of continued to rebound on Thursday morning, hitting its highest level since 5th June, with traders continuing to point to the adoption of Bitcoin as legal tender in El Salvador as one of the main reasons for the recent uptick.
Since hitting a low of $31,160 on Tuesday, Bitcoin has jumped over 20% to a high of around $37,600. On Wednesday, El Salvador’s parliament approved the Bitcoin Law, officially making Bitcoin legal tender in the country and Bitcoin supporters have taken this development as confirmation that cryptocurrencies could replace fiat currency in the near future.
However, details are still relatively light on how Bitcoin will be adopted in the near term, although the law states that prices can be shown in Bitcoin and tax contributions can be paid using the cryptocurrency.
Despite the rebound in price, some analysts are still pointing at more pain to come for Bitcoin and other major cryptocurrencies.
Analysts at JPMorgan (NYSE:) have pointed to backwardation in the futures market as a reason to be cautious.
“We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market,” JPMorgan strategists said.
Furthermore, some technical analysts point to the convergence of the 200 Day Moving Average towards the 50 Day Moving Average as a sign of further selling. If the two prices are to cross, known as a ‘Death Cross’ then a larger decline could be witnessed.
On the other hand, the psychological $30,000 level continues to act as solid support, with Bitcoin failing to break below that level, despite the negative press surrounding cryptocurrencies, including the slowing institutional adoption and fears of increased regulation.
Just yesterday, China’s Qinghai province reportedly ordered all cryptocurrency miners to close down. Separately, the Chinese Ministry of Public Security announced on Thursday they had arrested over 1,100 people suspected of using cryptocurrencies to launder money.
But for now, Bitcoin continues to trade within the $30,000-$40,000 range and it feels like something major will have to happen before a move outside the range is observed.