Bitcoin Price Analysis: December Highs in Play as Daily Trade Volume Blows Past $11 Billion

Bitcoin’s price saw further appreciation on Saturday, as the bulls set their sights on December highs – a major inflection point for the leading digital currency.

BTC/USD Update

Bitcoin is currently valued at $4,039.50 on Bitfinex, having gained 2.5% during the session. The fast move north of $4,000 is a strong signal that the bulls are looking to re-test last month’s high en route to the December peak. In both cases, $4,200-$4,300 represents the next major resistance test. Bitcoin faltered near these levels during last month’s rally.

The leading digital currency is enjoying a strong momentum swing based on the daily relative strength index (RSI). Price action has also gathered pace, with bitcoin now trading well above the 50-day moving average.

Market activity has picked up sharply in the last 48 hours, with daily trade volumes surpassing $11.1 billion, according to CoinMarketCap. That was the highest level since the last major breakout attempt on February 23.

Trade volumes make a strong case that the worst of ‘crypto winter’ has passed. The upsurge in trading activity reflects a large accumulation of BTC on virtual currency exchanges that began last summer. Activity in over-the-counter markets and private bilateral contracts also suggests smart money is looking to push prices higher.

At current levels, bitcoin’s total market capitalization is fast approaching $70 billion. That represents 51.6% of the overall cryptocurrency market cap.

How High Can the Rally Go?

Although bitcoin remains in an overall bearish state, the combination of higher trade volumes and improved investor sentiment suggest that a bigger breakout is possible in the short term. An analysis of Fibonacci levels by crypto trader @filbfilb puts the next major target at $5,000. In his view, bitcoin can reach that level by May.  That would mark a significant departure from the throes of crypto winter, which have seen bitcoin struggle to overcome $4,000 on multiple occasions. 

A target of $5,000 is fairly conservative if bitcoin can finally overcome the aforementioned $4,200-$4,300 range. Beyond that level, the digital currency would need to clear $5,500 and eventually $6,800 to negate the long-term downtrend. That’s the general view of Murad Mahmudov, a leading crypto analyst who believes bitcoin will witness a slow grind higher heading into 2020 (that’s when the big breakout will occur).

Also read: Has Bitcoin Bottomed? A Closer Look at the Bullish and Bearish Cases.

The bullish case is strengthened by the wave of positive news surrounding bitcoin adoption among institutions and even businesses. The author gave a quick rundown of bitcoin adoption trends in a February 23 article.

The rise in institutional trading and over-the-counter markets suggest there will be high demand for a range of bitcoin-related markets set to launch very soon. These include Intercontinental Exchange’s Bakkt trading platform for physical bitcoin futures, Fidelity Investments’ emergence as a crypto custodian and the eventual launch of ErisX, a well-funded cryptocurrency exchange geared toward institutions and retail traders.

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