In the past 48 hours, the valuation of the crypto market increased by $13 billion as Bitcoin moved rapidly from $3,600 to $3,900 by 10 percent.
Traders are expecting a near-term pullback following a strong movement in the cryptocurrency market.
But, economist and analyst Alex Krüger foresees the Bitcoin price surging fast beyond key resistance levels if the dominant cryptocurrency is able to break out of the crucial $4,200 mark in the weeks to come.
The time frame during which Bitcoin can initiate a speedy rally from $3,900 to $4,200 remains unclear as the daily volume of the cryptocurrency market has noticeably declined since its initial spike on February 18.
As Su Zhu, the CEO of Three Arrows Capital, recently said, there currently is more than $2 billion in fiat sitting at exchanges, stablecoins, and crypto funds.
No additional capital from a new group of investors such as institutions is necessary for BTC to initiate a proper trend reversal in the foreseeable future.
Existing capital in the cryptocurrency market is sufficient to trigger a major rally that could allow BTC to revisit crucial levels in the $10,000 to $12,000 range.
Hence, Krüger explained that given the chart of Bitcoin has all signs of a bottom, technical factors may be enough to push BTC above the $4,200 resistance level in the near-term.
The analyst said:
“The BTC chart has all the components of a bottom. Capitulation (Nov to Dec), bounced off long term trend measure, twice, on Dec & Feb (200 WMA), broke out from higher low in high volume (Now). A flush down on the last push lower would have increased bottom odds.
Strong move up to fill in the gap above is a matter of when not if. Such move up can happen entirely on technicals i.e. it does not need a fundamentals catalyst nor a change in market structure.”
If technical factors of Bitcoin successfully fuel a short-term rally, BTC could break $4,200, which Krüger sees as one of the most important resistance levels that may allow the asset to initiate a rapid movement to the upside.
Many fundamental factors that may potentially contribute to the short-term rally of BTC also exist. By the end of the first quarter of 2019:
Through Grayscale’s Bitcoin Investment Trust (GBTC), accredited investors are purchasing Bitcoin in the U.S. market with a substantial premium.
Every share of GBTC represents one-thousandth of a BTC and as of February 20, the price of GBTC is $4.68, which is equivalent to $4,680 per BTC.
“Rise in premium is a sign of institutional net buying (easier to buy this ETN from Grayscale than buy via a crypto exchange). Another sign 2019 way better than 2018 for crypto,” Tom Lee at Fundstrat said.
The sentiment in the cryptocurrency market has recovered in the past week due to the spike in the valuation of the crypto market, primarily because many analysts expected the market to demonstrate a downside movement following weeks of stability shown by BTC.
In the upcoming days, depending on the performance of BTC, traders generally expect a short-term pullback but a strong price movement thereafter.
Several cryptocurrencies including Binance Coin have recorded large gains in the 5 to 20 percent range amidst highly anticipated product launches.
Last modified: May 20, 2020 1:19 PM UTC