Crypto newsletter: Bitcoin rises back above $50k ahead of major change to El Salvador economy

• Bitcoin will become legal tender in El Salvador on Tuesday
• Bitcoin broke above psychological 50k level
• NFTs support Ethereum rally

The past week was a very positive one for the major cryptocurrencies. Bitcoin finally managed to climb above the $50,000 level, however altcoins surpassed bitcoin in growth several times, reducing its market share to almost 41%. Over the week, the capitalization of altcoins increased by 15% and reached $1.34 trillion.

Bitcoin above major resistance zone

On Friday, Bitcoin broke above major resistance of $50,000, paused for the weekend, and tested $52,000 level during today's session. Bulls are now targeting $56,860 level before a potential retest of all-time high at $64,388. Also symbolic event will take place will take place this week – Bitcoin will become legal tender of a sovereign state for the first time in history. Tomorrow, El Salvador will officially begin using Bitcoin as its national currency alongside the United States dollar, despite warnings and even demands to abort the move from the International Monetary Fund and its own citizens. The majority of El Salvadorans are skeptical of the country’s impending Bitcoin Law, however 90% of locals described their understanding of crypto as poor or non-existent.

Fundamental factors still support Bitcoin. The Difficulty Adjustment Index, which illustrates miners' activity, shows no signs of slowing down in the amazing recovery that began after the Chinese government crackdown in May. At the same time, the hash rate continues to rise, surpassing 130 exahashes per second (EH /s) recently and is heading towards its all-time high of 167 EH /s.

Bitcoins miners activity continues to increase. Source: Blockchain.com

On the other hand, the Bitcoin Fear & Greed Index, which is based on a multifactorial sentiment analysis, jumped to 79 and again reached “extreme greed” level which may herald potential downward correction.

The Crypto Fear & Greed Index again reached “extreme greed” level. Source: alternative.me

BITCOIN price broke above the major resistance zone ranging between $50,000 handle and the 61.8% retracement of the downward move launched in mid-April 2021. However, upward movement was halted around $52,225  and price pulled back towards the aforementioned $50,000 level which now acts as support. Should break lower occur, then downward correction may deepen towards the $45,000 mark. On the other hand, should buyers manage to regain control, then the next target is located around $56,860 and is marked with the 78.6 Fibonacci retracement and previous price reactions. Source: xStation5

Ethereum price surges amid rising demand for NFT's

Ethereum price jumped more than 22% over the week, and its share on the crypto market again exceeded 20%, partially thanks to increasing demand for NFTs ( Non-fungible tokens) which are unique, irreplaceable, rare, easily identifiable digital objects protected by cryptography, with digital representations of real world objects such as art, music, objects and video games. Each NFT is a unique, irreplaceable or scarce resource, thus highlighting the concept of scarcity in the digital world. Demand for NFTs which are based, among others, on the Ethereum blockchain, rose sharply in recent months and trading volume exceeded $3 billion in August.

Ethereum tested major resistance at $4000, however buyers failed to uphold momentum and price is currently testing the earlier broken upper limit of the wedge formation. Should break lower occur, downward move may accelerate towards support at $3,790.  Source: xStation5