Bitcoin Price Analysis: Market Cap Rises, Dominance Falls; Time to Buy?

Bitcoin’s slow grind to the north resumed Monday, as the leading digital currency hit new five-week highs on anticipation that a new bull market was materializing.

BTC/USD Update

After reaching a high of $4,207 on Bitfinex, the bitcoin price was last spotted near $4,195 for a gain of 0.7%. Although bitcoin usually trades at a hefty premium on Bitfinex, the spread between it and other exchanges narrowed to just $70.

The following chart via Bitstamp shows strong upside for the BTC/USD, based on the most widely used measures of momentum and price action.

At current values, bitcoin has a total market capitalization of around $73 billion, the highest since February 24. Reported trade volumes on virtual currency exchanges topped $10 billion, with spot markets accounting for roughly 93% of the daily turnover.

This marks the third time this year that bitcoin has made a sustained push toward $4,200-$4,300. This level is seen as a critical resistance test for the BTC price, as it represents the high from December.

End of Crypto Winter?

Bitcoin’s renewed upside has been accompanied by a sharp drop in volatility. The 30-day volatility index, which tracks the extent of bitcoin’s price fluctuations, has plunged to 1.3%, according to bitvol.info. That’s the lowest level since mid-November, just before the bitcoin cash hard fork.

Declining volatility usually means greater price stability for bitcoin but this isn’t always a positive sign for the cryptocurrency. Beginning in the third quarter of last year, bitcoin’s price was virtually rangebound, holding slightly north of $6,000. Then the bottom fell in mid-November, leading to a 50% plunge over the next five weeks.

The tide finally appears to be shifting. Bitcoin has exhibited greater price stability this year, a trend that seems to be helping the bulls. Case in point: the digital currency has now rallied for two consecutive months.

Bitcoin’s slow grind higher has seen its market cap appreciate but its overall influence decline. The leading digital currency now account for just 50.1% of the cryptocurrency market capitalization and is on track to fall below half in the not-too-distant future. That’s because a greater number of altcoins and tokens have escaped bitcoin’s immediate influence. Binance Coin (BNB), Litecoin (LTC), EOS (EOS) and several of the small caps have exhibited greater price independence in the last three months.

Time to Buy?

Investors who have been cost-averaging bitcoin throughout the bear market have likely accumulated a substantial sum of BTC. With the price floor near $3,100 protected, the next several months could see substantial upside for the cryptocurrency. This is supported not just by price action but by improved market fundamentals related to adoption, institutional access and technical progress.

Read more: Bitcoin’s Year of Accumulation

Based on the above, it’s easy to conclude that the long-term investment case for bitcoin remains as strong as ever. Depending on your underlying goals and investing horizon, 2019 still provides a good opportunity to cost average the coin ahead of the highly anticipating ‘halving’ event in May 2020. Historically, bitcoin’s price tends to be influenced by the halving event a year before miners’ reward is actually cut.

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