Bitcoin (BTC) Bullish: 5 Reasons for the Rally to $7,000
The BTC prices received a boost from increased dollar-based activity, sparking hopes for an extended rally and more significant yearly highs.
Bitcoin (BTC) extended its rally to as high as $7,500 before making a small retreat. Despite predictions that the bear market may return, BTC managed to rise by more than $2,000 net in the past month, despite the lack of positive news. Here are five factors that may be contributing to the latest rally:
Higher exchange activity
The 2019 rally for BTC is quite different from the December 2017 price climb. In the past year, multiple exchanges launched and went on to increase their activity and trading volumes. The boost from increasing trading volumes, arbitrage opportunities, and higher liquidity is generating conditions to make BTC markets more predictable. Additionally, an ecosystem of stablecoins, with Tether (USDT) as its bellwether has made international trading easier. While USDT holds risks, it is also a tool that has managed to increase liquidity for both BTC and for altcoin markets. In the past month, the share of USDT trading for BTC remained high but ultimately led to an inflow of dollar-based traders.
Thresholds on moving averages
BTC prices are gaining slowly, but also triggering significant events in crossing short-term and long-term moving averages.
The event of a “golden cross” does not guarantee gains, but it may trigger trading activity, including bot-based orders. Additionally, BTC rises on a dose of irrational optimism. The current BTC rally is mostly based on the activity of older traders, and there are expectations that new retail buyers may join the market. This time, however, it may be more difficult, as BTC has shown its high volatility, causing multiple losses since December 2017.
There are skeptics that define the current rally as another short-term pump. BTC usually makes its gains within a short timespan, suggesting that the activity may be concerted. During the BTC climb up above the $4,000 level, experts noticed a sudden inflow of funds, where $100 million sent to several exchanges led to a significant price increase.
This time, there are also signs that the efforts of “whales” could have lifted the price - including the fact that the most recent price spike happened over the weekend, where a lot of smaller traders may be absent. In the case of a one-off event, there are still expectations BTC may return to a lower tier.
Altcoins lagging behind
The current spike in BTC prices also follows the pattern of increasing dominance, while altcoins temporarily lose their appeal. In the past month, BTC has outperformed most altcoins, and traders are basing their hopes for returns on the leading coin. An altcoin season or a rally may arrive in the coming months, but there are also periods where “Bitcoin is king”, re-establishing its dominance and becoming the center of speculative trading.
CME futures remaining positive
The BTC prices are holding up, despite the discrepancy with the futures on the CME markets. Skeptics saw the opening of futures markets and Asian markets as a risk to the current price level:
But for now, BTC survives, with robust US dollar trading volumes, extending the enthusiasm with expectations of getting closer to the $10,000 level again.
Neither the author nor the publication assumes any responsibility or liability for any investments, profits, or losses made as a result of this information. Cryptocurrency trading and investing are risky propositions, and market participants are advised to always conduct thorough research.