In the past hour, the Bitcoin price has surged from $7,030 to $7,200, bringing the entire market with it to the upside.
Bitcoin Cash, NEO, Litecoin, ICON, EOS, VeChain, Tron, Qtum, Cardano, and most major tokens have recorded 5 to 15 percent gains in the past 30 minutes, showing the establishment of newly found momentum.
Previously, technical analysts in the cryptocurrency community have said that the break out of Bitcoin at the $7,200 resistance level could lead to a major short-term rally.
Why is $7,200 Crucial?
On August 30, the Bitcoin price fell from $7,100 to $6,800, showing vulnerability in the high $6,000 region. The majority of investors and retail traders expected Bitcoin to fall to mid-$6,000, seeing no support levels in between $6,500 and $6,800.
However, within a 12-hour period, BTC rebounded relatively quickly to the $7,000 resistance level, showing decent momentum and volume.
Last week, the volume of the entire cryptocurrency market remained below $9 billion, as the daily trading volume of Bitcoin and Ether dropped to $3.5 billion and $1.3 billion respectively. As of September 1, the volume of the market remains above $13 billion, possibly triggered by immense buy pressure at the lower price range.
CCN.com reported throughout the week that the stability Bitcoin had shown throughout August is crucial to acknowledge, as it achieved its most stable month in the past 14 months. Stability is required in a major trend reversal and if Bitcoin can continue to sustain stability in the weeks to come, a major mid-term rally is possible by the end of 2018, as investors like Fundstrat’s Tom Lee predicted.
“I do think in 2018, trading has shifted. I do think hedge funds are playing a role right now,” Lee said earlier this week, reaffirming his end of the year BTC price target at $20,000.
On September 1, SFOX, a cryptocurrency trading technology firm, released a report confirming Lee’s findings.
Researchers at SFOX argued that subsequent to the involvement of institutional investors and hedge funds, the price differences between exchanges dropped, as the cryptocurrency market gained stability.
“Before institutional firms were actively trading crypto or heavily involved (before 2018) bitcoin price differences between exchanges varied as high as 4.5%,” Danny Kim, head of growth at SFOX, told Business Insider’s Frank Chaparro in an interview.
Where to Next?
On major cryptocurrency exchanges like Binance, token-to-BTC trading pairs are seeing a rapid increase in volume.
Ontology, ICON, VeChain, Tron, and 0x, which have showed weakness against Bitcoin and the US dollar, have started to pick up volume and momentum.
Given that Bitcoin has successfully broken out of the $7,200 resistance level and the dominant cryptocurrency remained in the $6,500 to $7,000 region from August 6 to August 30, it is likely that in the short-term, BTC and the rest of the market enters a rally.
Featured image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:36 PM