Bitcoin's price surged to seven-week highs on Tuesday, setting the stage for a momentum rally in the short term.
After more than a month of lateral trading, bitcoin’s price appears to be gearing up for a major breakout in the not-too-distant future.
The largest cryptocurrency finally pierced above $8,000 on Tuesday thanks to a noticeable spike in trade volumes.
After a quiet start to the year, bitcoin’s price has attracted stronger bids over the past two days. The largest cryptocurrency clawed above $8,100 on Tuesday for the first time since Nov. 20. The nearly 5% rally has some traders excited about an imminent trend reversal.
Their excitement isn’t without merit.
As the daily chart illustrates, bitcoin’s price is back above the 50-day moving average. Largely seen as a bullish move, the price action foretells bigger gains in the near term.
Despite a slow start to the year, bitcoin is up nearly $1,000 since Jan. 1.
At current values, the largest cryptocurrency has a total market capitalization of $144.7 billion, according to CoinMarketCap. The tracking website shows daily trade volumes of nearly $27 billion, most of which is fabricated. The Bitwise data feed, which includes turnover at ten verified spot exchanges, reads closer to $1.4 billion.
Compared with 24 hours ago, bitcoin’s price has gained nearly 7%. The rally has been accompanied by a much broader uptake of digital currencies, with altcoins and tokens appreciating sharply over the past day. Bitcoin’s dominance rate currently sits at less than 69%.
Bitcoin’s recovery comes on the heels of multiple bullish calls by some of Crypto Twitter’s most influential voices. Several notable traders have already called bitcoin’s bottom and expect the largest cryptocurrency to push higher in the first quarter.
Alternative’s sentiment analysis indicator points to improved investor sentiment. The Bitcoin Fear & Greed Index now sits at 40, having recovered from a state of ‘extreme fear’ of 20 last month.
Although many traders expect bitcoin to rally following the next halving event in May, others see an accumulation pattern forming. Some of bitcoin’s biggest accumulation phases have been fueled by smart money investors and the so-called whales snatching up BTCs at lower prices. If these constituents are buying, there’s a strong reason to believe that prices have already bottomed.
While some analysts have connected bitcoin’s rally to heightened tensions between the U.S. and Iran, geopolitics probably didn’t factor into investors’ decision to accumulate crypto. Technical trading and the presence of oversold conditions likely played a bigger role. Combined with smart money accumulation, bitcoin’s performance probably has less to do with Iran and more to do with re-positioning ahead of what’s expected to be a critical year for crypto.
Fundamentals also support bitcoin holders’ long-term investment strategy. Hash rate has not only hit new all-time highs, it’s up eight times since late 2017 when bitcoin peaked near $20,000.
This article was edited by Josiah Wilmoth.
Last modified: January 22, 2020 11:39 PM UTC