Bitcoin Bulls Eye $6,000 as Momentum Grows, Facebook Seeks $1 Billion for New Cryptocurrency

Bitcoin’s bulls were back in full force on Friday, as investors rallied behind news that Facebook was building a pipeline of partnerships to launch a new cryptocurrency ecosystem. An analysis of bitcoin’s technical movements has also revealed an important bullish indicator that preceded the multi-year run that began in November 2015.

The sudden surge in bitcoin’s price triggered an equally large rally across the cryptocurrency ecosystem, with altcoins and tokens putting up big gains. The total market cap has eclipsed last month’s high, offering further confirmation that ‘crypto winter’ is long gone.

$100 Billion Bitcoin

After stagnating for much of the week, bitcoin’s price broke out on Friday, setting new highs for the year. The rally, which began in Asia, pushed BTC north of $5,800 on most major exchanges. The leading cryptocurrency traded near $6,100 on Bitfinex, an exchange known for its hefty bitcoin premium. That premium has widened to more than 6% in the wake of the latest controversy involving Tether. Read more: USDT Bump? Why the Tether Scandal Could Send Bitcoin Soaring.

A combination of positive news, technical trading and improved investor sentiment guided bitcoin higher at the end of the week. According to CoinMarketCap data, BTC is currently valued at $5,807 for a gain of 6.3%. Week-over-week, the cryptocurrency is up more than 10%.

As it currently stands, bitcoin has a total market capitalization of around $102.7 billion, the highest since November.

Bitcoin is currently in the midst of a three-month winning streak and its recent performance suggests that a re-test of pre-November levels are likely. The bulls are likely to face strong resistance near the $6,000 mark, as covered in our recent analysis.

The Trigger Indicator

Zeroing in on the technical aspect of the latest rally, bitcoin has achieved a major milestone that could set the stage for a more explosive rally in the near term. As CCN reports, cryptocurrency trader Peter Brandt used a so-called factor benchmark analysis to evaluate the weekly moving average of bitcoin’s price. Based on that analysis, the current weekly MA profile matches the one seen in November 2015 when bitcoin was valued at just $340.

Based on Brandt’s analysis, bitcoin could be on the path to record highs at some point in the next few years. This mirrors Hacked’s previous analysis on the bitcoin four-year cycle, which can be found here.

As a recap: bitcoin completed its last four-year cycle in December when prices bottomed near $3,100.

Altcoins Surge

Alternative cryptocurrencies added a combined $4 billion to their market cap overnight but their share of the overall pie fell below 45% for the first time since December. The combined market capitalization of all cryptocurrencies, including bitcoin, reached $187.7 billion on Friday.

As a result of the strong rally on Friday, the top 20 cryptocurrencies all traded higher for the week. Bitcoin cash (BCH) was the best-performing large-cap, gaining 7% on Friday and 11.5% during the week. It last traded just below $295.

Litecoin (LTC) outpaced the broader market, gaining 8.6% on Friday and 10.4% during the week to climb back above $80.

A lesser known proof-of-stake cryptocurrency by the name of Cosmos (ATOM) surged 13.4% on Friday and more than 42% for the week. Learn more: Cosmos (ATOM) Suddenly Becomes Top-15 Cryptocurrency after Binance Listing.

Facebook Coin Coming Soon?

After more than a year of speculation about Facebook’s potential role in the cryptocurrency ecosystem, The Wall Street Journal confirmed on Thursday that the social media giant was already developing a new blockchain-based payment system. Citing sources familiar with the matter, WSJ said Facebook is actually developing a new cryptocurrency that could be used to send and receive payments across its vast network.

What’s more, Facebook is seeking roughly $1 billion for the new initiative and has already approached credit card companies Visa and MasterCard about a potential partnership. The cash infusion would ensure ‘FB coin’ is well capitalized and stable, unlike most of the major cryptocurrencies today.

Facebook dabbling in stablecoin? Will it involve WhatsApp?

The social media giant is already in talks with e-commerce companies and app providers about accepting the new coin. In other words, Facebook is betting big that cryptocurrencies represent the wave of the future.

The Week Ahead

When bitcoin first overcame the $5,000 plateau, investors were left wondering whether the rally would last until the next major psychological milestone – $6,000 – or swing back toward the $4,000 region. Bitcoin’s dominant trend suggests the path of least resistance is still higher and will remain so for at least another two months. That’s because bitcoin’s four-year cycle is guided by dominant uptrends or downtrends that typically last five-to-six months. Investors should keep this in mind when evaluating price movements, including large pullbacks like the ones we’ve observed in recent weeks.

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.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi