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.

Volumes Surge

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.

Related: Bitcoin’s Price Recovery Stalls as BitMEX Shuts Down U.S. Accounts.

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.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, 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