Crypto Markets are Up $16 Billion Since Sunday; What’s Behind the Rally?

Cryptocurrency prices are flashing green on Tuesday, as bitcoin and the major altcoins extended an early-week rally that was brought on by a sudden surge in trade volumes. The market’s performance over the past two days suggests that the big buyers are absorbing selling pressure following weeks of mostly lateral moves for the majors.

Market Update

The combined value of all coins reached $135.8 billion on Tuesday, the highest since early January, according to CoinMarketCap. The total market capitalization has increased by nearly $16 billion since Sunday.

At the time of writing, the top 30 coins were all reporting gains. Double-digit gainers included EOS (+15.3%), bitcoin cash (+10.6%) and Stellar (+11.6). Each of these top cryptocurrencies were considered severely oversold during the latest bout of selling pressure that extended into February.

EOS is tracking weekly gains of 30% and has moved well north of $3.60. The cryptocurrency had been firmly capped below $3.00 since November amid the wider market downturn and fallout from the ICO bust. EOS currently has a market capitalization of more than $3.3 billion, inching closer to its ICO value of $4 billion.

Oversized gains for EOS pushed Litecoin back down to the no. 5 spot in the crypto market cap index. Litecoin is currently trading below $49.00, having gained 5.3%.

Bitcoin, the market’s primary bellwether, reached an average aggregate price of $4,010.15, according to CoinMarketCap. That represents a gain of 5% over the past 24 hours. The bitcoin price traded as high as $4.083 on Bitfinex. More on this story: Bitcoin Blows Past $4,000 as Volume Surges to 10-Month High.

Volumes Tell a Story

An eye-popping surge in trade volume across all exchanges and cryptocurrencies was the primary catalyst behind the rally. But what’s driving volume, and why was the burst so sudden? A closer look at exchange-based volumes reveals that market activity has been rising steadily since at least October. In fact, data from Flipside Crypto reveals that the volume pump may have originated last summer when long-dormant bitcoin accounts began transferring funds onto exchanges.

Bitcoin’s circulating supply has been rising since last July, with the most dramatic surge occurring over a 30-day stretch between December and January. As Hacked reported at the time, “It’s clear that many of these dormant account holders are preparing to become active traders once again.”

Volumes have been consistently higher throughout the year. Ethereum, the market’s no. 2 cryptocurrency by total capitalization, recently printed its largest-ever volume on Bitfinex. Over a three-week period ending Feb. 15, so-called “smart money” absorbed selling pressure to the tune of 13.627 million ETH. That was equivalent to $1.8 billion at the time. As Hacked analyst Kiril Nikolaev noted, “Whales had to commit such an amount to keep prices from falling further. Even for rich people, this is a huge investment.”

Related: Ethereum Price Analysis: Volume Spike Pushes ETH/USD to Monthly Highs.

Trade volumes across all exchanges and cryptocurrencies topped $36 billion on Tuesday. During long stretches of ‘crypto winter,’ daily trade volumes were in the $10-$12 billion range. Since the new year, daily turnover has averaged more than $15 billion.

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