Bitcoin Blows Past $4,000 as Volume Surges to 10-Month High
Bitcoin’s bulls maintained full control of the market on Tuesday, as the BTC/USD exchange rate crossed $4,000 for the first time since early January. In the process, exchange-based volumes surged to their highest levels in ten months.
BTC/USD: Breakout Eyed
The bitcoin price crossed $4,000 on Bitfinex and reached a session high of $4,048. That was the highest level since Jan. 8. At the time of writing, BTC/USD printed $4,006.30 on Bitfinex, having gained 0.7%. The latest recovery attempt has produced strong momentum for the bitcoin price, as evidenced by the hourly relative strength index (RSI).
Aggregate data provided by CoinMarketCap show an average bitcoin price of $3,921.67 as of Tuesday morning. That’s a gain of 4.2% over 24-hour cycle.
In terms of technical indicators, bitcoin must return above $4,200 to negate the long-term downtrend. This is the high from late December and represents the 15-week moving average prior to the last breakout attempt. Beyond that, the bulls must return above $5,500 and eventually break the 50-week moving average near $6,800 to convince traders that a full-blown recovery is afoot.
Trade Volumes Surge
The rally on Tuesday is a continuation of a sudden breakout that began more than 24 hours ago. On Monday, bitcoin and the broader cryptocurrency market rose to five-week highs thanks to a confluence of technical and fundamental forces.
A significant rise in trade volumes has underpinned the market’s push north. More than $10 billion worth of bitcoin traded hands on virtual exchanges in the last 24 hours. According to CoinMarketCap data, that’s the highest since April 2018. Virtual currency exchanges processed nearly $36 billion worth of cryptocurrency transactions over the same period.
The following chart highlights the extent of the volume surge on individual exchanges. Three exchanges processed more than $1 billion in adjusted volume; 12 more reported adjusted volumes of $500 million or greater. The billion-dollar exchanges are Binance, Bit-Z and OKEx.
The volume surge has contributed to higher volatility over the past two days. As of Monday, bitcoin’s 30-day volatility index rose to 2.24%, according to bitvol.info. That’s a gain of 32 basis points from Sunday, when volatility fell to three-month lows.
For crypto traders, volatility is a double-edged sword; a dramatic swing in price makes things like market timing and technical analysis more difficult to use. Significant levels of volatility also make rapid price declines more likely. On the opposite side of the ledger, the 2017 bull market showed that volatility can lead to parabolic gains for bitcoin and its altcoin peers.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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