Bitcoin Price Targets $4,000 Following Sudden Burst
Bitcoin is riding a new wave of momentum heading into the weekend after a sudden burst higher on Friday, a sign that the market is basing for a potential breakout in the near future. The sudden reversal follows a string of lackluster sessions that dragged BTC to the low $3,600 region.
The bitcoin price made a definitive move north of $3,900 at the start of Saturday, according to CoinMarketCap. At the time of writing, bitcoin averaged $3,920.46, up 6.4% on the day.
The leading digital currency traded closer to $4,000 on Bitfinex after touching an intraday high of $4,084.90. It was valued in the $3,860 region on Coinbase, Bitstamp and Bittrex, among others.
Markets saw a large influx of trading activity at the end of the week; as of Saturday, bitcoin’s exchange-based volume surpassed $5.6 billion. Spot markets have experienced a large jump in volume in recent days, with BTC/KRW and BTC/USDT positions rising steadily. BitMEX, the popular derivatives exchange, processed nearly 21% of bitcoin’s daily volume. That’s down from around a third earlier this month.
A stronger bitcoin resonated with the broader market, leading to a sharp rebound in altcoins and tokens. The combined crypto market cap on Saturday was worth $132 billion, up from $121 billion more than 24 hours ago.
Bitcoin’s recent movement reflects a consolidation pattern following a highly volatile two-week stretch. For the bulls, it means the market is carving out a new trading range that is well protected from the recent bear-market low. Bitcoin plunged toward $3,100 earlier this month before rebounding sharply to the $4,300 range. This latter movement was significant because it overcame a vicious cycle of lower highs and lower lows.
A clean break above $4,000, the psychological target, would likely lead to a re-test of last week’s highs. However, more aggressive rallies are needed to signify a trend reversal (this means a breakout from $4,800 and above). Information available at this time suggests that such a move remains highly unlikely.
A $4,000 price target would allow bitcoin to break even for the month, a significant feat given the extent of the recent bear trap. Prices are down more than 40% this quarter.
The bitcoin volatility index suggests that tumultuous trading conditions are once again the norm, which means investors can expect the recent string of sharp and sudden moves to continue. According to bitvol.info, bitcoin’s 30-day volatility index reached 4.79% on Friday. The index peaked near 6% on Dec. 18.
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.
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