Crypto Spring? Bitcoin on Track to Snap Six-Month Losing Streak Following Spectacular Week
The long awaited ‘crypto spring’ may have arrived early for bitcoin (BTC) and its altcoin peers. After weeks of steady accumulation on virtual currency exchanges, a high-volume surge drove bitcoin to its best levels in almost two months. The leading digital currency is now teetering on the brink of bullish reversal.
Many of the leading altcoins and tokens registered double-digit gains this week, with EOS (EOS) emerging as the clear-cut winner. On the back of a 38% weekly gain, the Enterprise Operating System is now within $500 million of its ICO capitalization.
Bitcoin’s 10% Weekly Growth
The bitcoin price returned above $4,000 this week following a sudden surge in trade volumes on virtual exchanges. Bitcoin’s daily turnover crossed $10 billion on Tuesday, the highest in around ten months.
Bitcoin is not only charting a weekly gain of 10%, it is on track to end a six-month losing streak that has resulted in a 60% loss in market cap. After peaking at $4,174, the leading digital currency found itself trading in the mid-$4,000 range on Friday.
The bulls are targeting $4,200 as the next major resistance test; north of this level, there’s not much standing in the way of a return to $5,000. A sustained rally north of this level and back toward $6,000 – the breakeven rate for miners – is needed to negate the long-term downtrend.
Further reading: Has Bitcoin Bottomed? A Closer Look at the Bullish and Bearish Cases.
EOS is approaching ICO-level capitalization following a 38% weekly surge. The platform for decentralized applications is currently trading at $3.88, which is the highest since November. The breakout north allowed EOS to ‘flip’ Litecoin (LTC) for fourth spot in the crypto market index.
The sudden EOS rally got its cue from the broader cryptocurrency market in general and Ethereum (ETH) in particular. Ether, which is EOS’ main competitor, began to trek higher last weekend as trade volumes surged to monthly highs. The so-called developer’s cryptocurrency is being propped up by optimism tied to Constantinople, an upcoming hard fork.
Investors also bought up EOS over a ‘fear of missing out’ on the latest crypto rally. It also helps that the cryptocurrency was severely oversold during the last leg of the bear market.
Still, EOS has a long way to go before achieving mass adoption. The lack of a vocal leader akin to Vitalik Buterin (Ethereum) and Roger Ver (bitcoin cash) may be part of the problem. CCN.com has more on this story here.
Crypto Market Cap Rises $14 Billion
Gains were reported across all major cryptocurrencies this week and only three of the top 50 coins failed to generate positive returns. Even then, losses were limited to less than 0.5% and concentrated in stablecoins.
The following table, courtesy of CoinMarketCap, shows the extent of the weekly returns for the top 20 coins. Among them, 11 reported gains of 10% or more, with Maker (MKR) and Ethereum each rallying more than 20%.
The cryptocurrency market cap peaked at $136.2 billion on Wednesday. On Friday, the market was valued at $134.6 billion, having gained $14 billion compared to last week.
During the height of the rally, trade volumes topped $36 billion, the highest since last May. Read more: Crypto Markets are Up $16 Billion Since Sunday; What’s Behind the Rally?
Exchange-based volume likely accounts for less than half of total market turnover. Over-the-counter markets and private bilateral contracts for bitcoin have also seen an influx of trading activity. It is estimated that the over-the-counter market is at least as big as virtual exchange venues.
The Week Ahead
Signs of crypto spring have finally emerged, but not everyone is convinced that the worst is over. Alex Sunnarborg, a founding partner of crypto hedge fund Tetras Capital, recently told Forbes that calling a bottom is “very difficult” at this time. But even he has to admit that volume tells a compelling story.
Whether bitcoin and its peers have bottomed or not could be irrelevant in the long term. The recent wave of institutional adoption by the likes of Intercontinental Exchange, Fidelity, JP Morgan, Stuttgart Exchange Group and even Virginia pension funds suggest that cryptocurrency represents a paradigm shift for traditional finance.
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.