Bitcoin Price Crosses $3,900 as Bulls Eye Re-Test of December High

Bitcoin’s price extended its recovery Wednesday after a strong bounce during the previous session erased an early-week slump. The bulls are now eyeing a re-test of a key psychological level before taking aim at the December high.

BTC/USD Update

The bitcoin price peaked at $3,986.50 on Bitfinex. It has since pulled back to $3,950.00, where it was virtually unchanged. Bitcoin is back above the 50-day moving average where it looks to extend its latest recovery attempt.

On an aggregate level, bitcoin registered an average price of $3,897.26, according to CoinMarketCap. That reflects a gain of 2.6% over the pasts 24 hours.

Bitcoin and the broader cryptocurrency market rebounded sharply on Tuesday, reversing an early week slump that had shaved more than $5 billion off coin values. Read more:  Crypto Rally Gathers Steam as Volumes Spike 38%; Battle for Stablecoin Dominance Heats Up.

The quick reversal on Tuesday was accompanied by a surge in trading volumes. Roughly $10.5 billion worth of BTC traded hands on virtual exchanges in the last 24 hours, the highest in over a week. BitMEX was the largest single market for bitcoin trades, accounting for 11.7% of the daily volume. The spot markets accounted for the remainder.

Bitcoin Dominance Falls

Bitcoin’s dominance rate, or the percentage of the cryptocurrency market held in BTC, has declined over the past 24 hours as altcoins and tokens appreciated faster. Five of the top ten cryptocurrencies have outpaced bitcoin in terms of growth, with the likes of EOS and Litecoin registering double-digit gains.

At the time of writing, bitcoin’s dominance rate had fallen back to 51.6%. It was as high as 52.6% earlier in the week. During the recovery on Tuesday, bitcoin’s share of the market briefly fell below 50% for the first time since August.

It’s clear from this trend that some of the leading altcoins and tokens are slowing moving out of bitcoin’s gravitational pull. This is especially true for Litecoin and Binance Coin, two cryptocurrencies that have outpaced their peers for much of 2019. Binance Coin has more than doubled in price since the start of the year while Litecoin has rallied on news of private transactions and growing mainstream adoption.

That being said, bitcoin’s price is the most important proxy for the market as a whole; to negate the short-term bearish trend, it must return above $4,200 – the high from December. From there, the bulls must extend their rally beyond $5,000 and eventually $5,500. Although that’s a tall order in the current market climate, surging trade volumes and the return of smart money suggest it is possible in the medium term.

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.

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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