Bitcoin Launches Through the Stratosphere Following Overnight Rally
The bitcoin bull market shifted into higher gear on Saturday, as prices approached $7,000 for the first time since September, underscoring a parabolic multi-month rally that has taken the crypto market by surprise.
Bitcoin’s price peaked at $6,889.80 on Bitfinex, its highest since early September. The BTC/USD quote price was similar across most major exchanges, a sign that the so-called Bitfinex premium had weakened. At the time of writing shortly after 9:00 a.m. ET, bitcoin was trading at $6,808, up 5.7% on the day.
The largest and most influential cryptocurrency is up 18% this week, 34% over the past 30 days and a whopping 80% since the start of 2019. The price has more than doubled from its December low, which marked the definitive bottom of the devastating crypto winter.
Bitcoin’s market capitalization peaked at $122.1 billion on Saturday. It was last seen near $119.9 billion, accounting for 58.1% of the overall cryptocurrency market. That’s the highest percentage since December 2017, according to CoinMarketCap.
The BTC price cleared a major milestone this week when it crossed $6,000 for the first time since November. Technical strategist Murad Mahmudov had previously pencilled in $6,800 as the last major hurdle to negate the long term downtrend.
Read Hacked’s Week in Review: Despite Nasty Headlines, Bitcoin’s Relentless Surge Continues; Can Altcoins Keep Up?
Bitcoin’s parabolic surge has become a vertical one, setting the stage for a bigger pump north of $7,000, according to David Puell, the head of research at Adaptive Capital.
“$6.4k may activate longs from late trend traders, setting up the perfect blow-off top,” Puell tweeted on Saturday. Basically, fear of missing out, or FOMO, could trigger an even bigger rally in the short-term.
$BTC: Price is not only parabolic, but vertical now.
Shorts are still far from getting fully squeezed.
$6.4k may activate longs from late trend traders, setting up the perfect blow-off top.
Blue: pullback targets after this potential climactic top from who knows where. pic.twitter.com/L4J3Mno6ki
— David Puell (@kenoshaking) May 10, 2019
According to crypto analyst Alex Kruger, bitcoin’s next major resistance tests are found at $7,000 and $8,000.
$BTC now in bull market territory after an intraday blow-off top.
R: 7000, 8000
S: 6400, 6000
Old levels not as valuable, hence why above 6400 only looking at round numbers as major resistance.
Hourly volume at Bitmex was the 2nd largest ever after Sep/5/18. pic.twitter.com/ANmIIDJVf1
— Alex Krüger (@krugermacro) May 11, 2019
Bitcoin’s rally has sparked renewed interest in altcoins and tokens, with the total market capitalization blowing past $200 billion for the first time since the November market collapse. The crypto market peaked near $208 billion on Saturday, according to CoinMarketCap. Trade volumes were reported at $76.2 billion, but you should take this figure with a grain of salt.
With bitcoin firmly in the driver’s seat, the crypto market could see a strong tailwind for the remainder of the month. The only thing standing in the way of more explosive rallies is overbought resistance. Sharp pullbacks should be expected as the market completes the bearish-to-bullish turn. Given the extent of FOMO currently sweeping the market, there’s a strong chance that traders will be buying the dips. Read Buy on the Dip: Should You Load Up on Bitcoin in May?
This assessment was confirmed by Kruger, who tweeted on Saturday that bitcoin hasn’t been this overbought since it was priced at $13,700. “Back then, a parabolic move ensued,” he said.
Last time $BTC was this overbought (RSI) on a daily chart was December 6, 2017, with price at $13700. Back then, a parabolic move ensued.
— Alex Krüger (@krugermacro) May 11, 2019
Bitcoin is currently riding a three-month winning streak and looks poised to extend that rally for a fourth month. The research team at SFOX basically gave the same assessment in its monthly crypto volatility report, where it maintained a ‘mildly bullish’ outlook on the largest cryptocurrency.
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.