Bitcoin Surges to Five-Week High; Crypto Bulls Reignite?
Bitcoin and the wider cryptocurrency market surged to five-week highs on Monday, stoking renewed optimism that the end of ‘crypto winter’ was finally upon us. The sudden price surge was accompanied by a dramatic rise in trading volume, a phenomenon that was first observed in the fourth quarter.
BTC/USD: Price Update
The bitcoin price reached a session high of $3,864.00 on Bitfinex, levels not seen since the early part of January. At the time of writing, BTC/USD was valued at $3,843, having gained 2.9%.
Bitcoin has further room to accumulate, based on the MACD relative strength index (RSI). Both momentum indicators are flashing the ‘buy’ signal, based on the hourly chart.
Traders were paying a hefty premium on Bitfinex relative to other exchanges. The BTC price averaged in the $3,720-$3,730 range on Bitstamp, Bitstamp and Coinbase.
Looking at the big picture, bitcoin’s average price was $3,781, according to CoinMarketCap. That represents a gain of 4.2% compared with Sunday.
There was no immediate catalyst for the market’s sudden breakout on Monday. Rising trade volumes suggest that large-scale investors were absorbing more of the selling pressure that had re-emerged since the beginning of the year.
Bitcoin’s 24-hour volume improved to $8.2 billion, the highest since December. BitMEX, a popular derivatives platform, accounted for 18% of the exchange-based volume. The spot market made up the remainder. These figures likely understate the true size of bitcoin’s market.
It is estimated that over-the-counter trading accounts for at least half of global volumes. It recently came to light that “private bilateral contracts” have also surged in popularity among institutional investors. Read more: Bitcoin and Derivatives: Why $4,200 is So Critical.
The dramatic surge in trading volume over the past four months suggests that a bearish-to-bullish trend reversal may be afoot. If that’s the case, the sharp rise on Monday could be the start of a major rally attempt that seeks to knock out $4,000 and $4,200. A rally above the latter is needed to negate the short-term bearish outlook.
Cryptoassets as a whole added more than $8 billion in value on Monday, as the market cap pierced above $128 billion for the first time since early January. Over the past 24 hours, trade volumes have surged by 40% to $27.4 billion, according to CoinMarketCap.
Bitcoin’s share of the overall cryptocurrency market fell below 52% on Monday for the first time since Jan. 10.
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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