Bitcoin BTC Recovery: 5 Reasons for Price Spike
BTC cut its slide, gaining hundreds within a few hours to recover close to $7,200, staving off a worse slide.
Bitcoin (BTC) entered an unexpected relief rally, establishing a low just under $6,600. The relief rally happened just as BTC sentiment was extremely bearish, with lower bottoms predicted.
BTC, however, surprised the markets, by rising rapidly from a low at $6,545, adding hundreds of dollars after US open hours on Wednesday. BTC appreciated to a peak at $7,335, before sliding again, establishing stability at $7.145.22. Trading volumes picked up immediately to above $32 billion’s equivalent in the past 24 hours.
Here are the top 5 reasons for the recovery:
- Sentiment Improving: BTC trader behavior signals “extreme fear”, but it also seems traders are used to the risk. With futures and options markets available, price fluctuations and pressures are to be expected. But BTC has shown it is not worthless and going to zero, while in fact holding value for both traders and holders. The Bitcoin Fear and Greed Index even declined to 21 points, up from 15 points the day before.
- Short-Term Anomaly: BTC prices have been known to rise by hundreds of dollars in hours, even within less than an hour. BTC is seen as targeting $8,000 levels, though still remaining pressured downward. Bearish traders see the downward trend as continuing into the new year. This time, price discovery is highly dependent on futures markets, as only 60% of BTC activity happens against Tether (USDT), despite the increased volumes. This time, traders observed not USDT flows, but an accrual of longs on Bitfinex, targeting a higher price.
- Traders Still Interested: At the first sign of BTC recovery, Bakkt futures volumes reacted with a new high and still-robust open interest. Bakkt volumes reached an all-time high at 6,601 contracts traded, with open interest at $3.98 million. Twitter. The price slide did not turn BTC “boring”, and has not led to a capitulation, instead lifting up volumes and possibly sparking a renewed rally.
- Year-End Hype: The year-end is still away, and it is possible for BTC to rally to a higher tier, at the least. With the possibility of futures markets boosting valuations fast, BTC is seen as less dependent on whales. As some traders may delay selling until 2020 to delay taxation, BTC looks capable of a rally.
- Altcoins Looking Even More Bearish: Altcoin markets look set for more declines, as assets do not bounce as easily. Even major assets sink to lower valuations, while BTC promises more robust liquidity. With funds flowing back into BTC, the coin may once again become a source of short-term returns.
BTC remains highly unpredictable, and it is still possible to manipulate the price by various methods. But the market grows its liquidity over time, possibly avoiding a non-stop price slide.