Bitcoin has continuously broken through multiple key resistance levels to $13,200. What is the reason behind the surge?

On October 21, the price of Bitcoin (BTC) surpassed the $13,000 mark, reaching $13,217. In the past 48 hours, Bitcoin has broken through the key resistance levels of $11,900, $12,000, and $12,500. Although there are various technical reasons behind this sudden surge, there are three key factors driving the rally.

The three factors are: a favorable technical structure, PayPal's support for cryptocurrency purchases, and Bitcoin's rising dominance.

PayPal offers cryptocurrency trading and shopping services

Yesterday, PayPal officially announced that it will allow users to buy and sell cryptocurrencies including Bitcoin.

Speculation about PayPal’s potential cryptocurrency integration has grown over the past year, following various reports that the company was working on it.

PayPal President and CEO Dan Schulman confirmed PayPal’s cryptocurrency integration in an official statement. He wrote:

“We are eager to work with central banks and regulators around the world to offer our support and make a meaningful contribution to shaping the role digital currencies play in the future of global finance and commerce.”

Immediately after PayPal’s announcement, the price of Bitcoin surged from around $12,300 to $12,900.

Sui Chung, CEO of CF Benchmarks, a subsidiary of Kraken exchange, told Cointelegraph that bullish sentiment in the crypto market may be returning. According to Chung:

“Bitcoin surpassed $13,000 today, a 16-month high, indicating that this trend is accelerating. PayPal is a household name, and it has received a conditional BitLicense from the New York Department of Financial Services, which may drive bullish sentiment for Bitcoin. Today is significant for further gains in Bitcoin prices in the future. Mainstream media and retail investors may soon start showing interest in this asset, just as they did in late 2017.”

Bitcoin dominance is on the rise

Over the past week, Bitcoin has outperformed other cryptocurrencies, decentralized finance (DeFi) tokens, and Ethereum.

Bitcoin dominance Source: Josh Olszewicz

Cryptocurrency technical analyst Josh Olszewicz said that BTC’s dominance is above the key moving average. Technically, this suggests that Bitcoin may continue to outperform altcoins in the short term. Olszewicz said:

“BTC dominance is back above its 200-day moving average for the first time since May.”

BTC’s high time frame structure suggests bullishness

Throughout October, traders have identified a favorable technical structure for Bitcoin on the higher time frames.

Bitcoin’s weekly chart, in particular, showed a breakout and surpassed its previous all-time high set in August.

BTC/USD weekly chart. Source: TradingView.com

Two months ago, BTC’s highest price on Binance was $12,468 before falling below $10,000. As mentioned earlier, today’s high trading volume pushed the price of Bitcoin to a new 2020 high of $13,217, well above the previous local high.

In the short term, traders expect the market to cool down after such a strong surge. Flood, an anonymous crypto futures trader, said:

“I think Bitcoin is overpriced right now. I can imagine some pullbacks where we try to find support in the $12,000 to $12,200 range. Not saying it can’t continue to go higher, but some hedging here.”