Bitcoin Pierces Through Key Psychological Barrier as Bulls Eye December High
Bitcoin’s price rose overnight, reaching its highest level in about three weeks on the back of surging trade volumes and improved investor sentiment. The rally follows a nearly two-week stretch where price action was narrowly contained.
The bitcoin price peaked at $4,166.80 on Bitfinex, where it came within striking distance of the December high situated between $4,200-$4,300. Until now, bitcoin has been unable to overcome this pivotal region after attempting to do so on at least two occasions this year.
At the time of writing, bitcoin was hovering at $4,080.00 on Bitfinex, having gained 1.9% on the day. Aggregate data from CoinMarketCap show an average value of $4,042.64 across major exchanges, a gain of 2.2%.
With the latest move, bitcoin is back above the 50-day moving average and gaining speed as far as momentum is concerned. The relative strength index (RSI) shows a reading of 62, which is considered bullish.
Daily trade volumes are valued at nearly $10.2 billion on virtual exchanges, slightly below the recent high of around $11 billion but well above the yearly average. Bitcoin’s exchange-based volumes set a new 12-month high on Friday.
As far as derivatives, CME’s bitcoin futures contract for March settlement saw volumes of 2,938 contracts on Saturday. CME witnessed a record surge in bitcoin trading volumes at the start of 2019, according to an internal email that was later obtained by outside media.
Also read out Week in Review: Altcoin Season Arrives: Stellar (XLM) and Cardano (ADA) Take the Reigns.
Bitcoin’s Dominance Rate Falls
Despite a strong performance on Saturday, bitcoin’s share of the overall market has been steadily declining as altcoins and tokens continue to move independently of the original cryptocurrency. Earlier this month, bitcoin’s dominance rate briefly fell below 50% for the first time since the summer as Litecoin, Binance Coin and EOS continued to pull away from its gravitational pull. At last check, bitcoin’s dominance rate was 50.7%, according to CoinMarketCap.
As a general observation, bitcoin’s dominance tends to decline during bull markets and rise whenever bearish forces dominate. Case in point: bitcoin’s share of the crypto market cap plunged to a low of around 34% in January 2018 before climbing back to around 56% nine months later.
Bitcoin is also benefiting from growing mainstream adoption and general excitement over custody, Lightning Network and increased business adoption. The number of addresses created on the Bitcoin network has also increased substantially in recent months, mirroring levels not seen since last spring when the cryptocurrency was worth $6,000. Read more: What Do Bitcoin Addresses, Starbucks and Lightning Network All Have in Common?
The combination of rising trade volumes, growing retail interest and positive fundamental drivers suggests that the worst of ‘crypto winter’ may have already passed. At the time of writing, the total cryptocurrency market was valued at $140 billion, some $40 billion higher than the December low.
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.