Bitcoin is Back! - Is it?

By Matthew Lam   Apr 09, 2019 3 Min Read

 

This analysis is provided by Standard Kepler, the columnist for Blockchain.News.

Weekly Recap

Total market cap. reached $182bn (a 25.8% increase), and 7 day trading volume increased 84.6% for top 100 crypto.

Thoughts of The Week

I was told by a good friend who has next to zero connection to the cryptocurrency sector that “Bitcoin is back!” Is it? The price of BTC is up 26.4% since last week, the total market cap is up 25.8%, and trading volume for top 100 crypto is up 84.6% in the same period. Furthermore, cnLedger reported on Monday that “Chinese OTC (Over-The-Counter) trades […] showing considerable $ premium (1 USDT = 7 CNY) over the official rate of 1 USD = 6.7 CNY.” Let us have a quick look at last week’s spike.

A number of market irregularities would appear to be possible contributors to the rally. Reuters reported that a “single algorithmically managed order” worth US$100 million was issued across major exchanges, perhaps kick-starting the rally. Data from Bitfinex further indicated that the closing of short positions created further upward pressure on prices, with BTC/USD short positions dropping from ~20,700 BTC to ~17,100 BTC in the wake of the price surge.

Other less immediate factors exist that may have eased the path for the rally. Mining rewards are set to be halved in May 2020 (last time was in 2016), an event that historically affects markets up to a year in advance. BTC’s 50-week Moving Average (MA) further fell below its 100-week MA in February, with Coindesk commenting that “Put simply, it takes a great effort on the part of the bears to push the 50-week MA below the 100-week MA. As a result, the bear market is usually exhausted by the time the crossover is confirmed, which seems to be the case with BTC.”

“The bear is not dead until $6k falls with convincing volume – volume similar to that of the great dumpening in November”, as stated in r/Bitcoin does highlight the fact that long-term trade volumes are still low. “Volume has spiked on the weekly last week but it still does not amount to large amount of volume from our last movement down. Lower volume indicates that our move up is simple mean reversion and not driven by changes in the market.”

As pointed out by Charles, Head Trader at Genesis Block, 1D RSI indicates overbought conditions. Still, I wouldn’t expect average investors to pay much attention as they may fear missing out on a possible jump to the next level of resistance at the US$5,557 mark. Signing off with another interesting bit from Charles, “Biggest talk @ Deconomy was around the pump early last week. Complete speculation but to me it appears to be two potential scenarios: 1) A direct attack on those who were short vol., or 2) Coordinated pump by miners to build FOMO ahead of Summer. I lean more towards the latter as we’ve been hearing of big moves by Chinese miners for the past 1~2 months. Their tactics are playing out quite well as “Bitcoin” tops search queries on both Google and Naver.”

Chart of The Week

Apr1-7 Chart.JPG

Click here for the full analysis in PDF version

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Disclaimer

The views and opinions expressed in this article are those of Standard Kepler and do not necessarily reflect the view of Blockchain.News 


About the author

Matthew Lam
I believe the true value of cryptocurrencies is the underlying blockchain technology. The development of CBDC, DeFi, blockchain standardization are the key trends to watch in 2020!




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