Bitcoin’s Price Shoots Past $10,000, What’s Driving this Bull Rally?
One more time, bitcoin has surpassed the important level of $10,000 in a strong upward move. The digital asset jumped nearly 10% yesterday going above $10,400, climbing to a new 11-week high.
Currently, bitcoin is hovering around $10,100 while managing the daily trading volume of $3 billion. These gains have bitcoin trending yet again on Chinese Twitter, higher than US stocks.
— skew (@skewdotcom) June 2, 2020
This spike in price has the moving average convergence divergence gauge showing a positive trend while market sentiments finally turn to “greed.”
After crashing earlier this year, cryptocurrencies have regained their footing with bitcoin up 165% since its March lows. While Goldman Sachs’ client call about bitcoin not being a digital asset did little to dampen the optimism, enthusiasts are buoyed by Wall Street’s most famed investor Paul Tudor Jones calling it an inflation hedge. Edward Moya, senior market analyst at Oanda said,
“Cryptocurrencies have weathered the panic-selling storm that took place in March and seem poised to benefit from a wide-range of growing institutional interest.”
What’s Behind this Rally?
It’s not just the crypto market that is rising, but the stock market is also climbing amidst a global pandemic and racial strife.
“History shows markets look through many sorts of tumultuous events and have done so for decades,” said Nicholas Colas, co-founder of DataTrek Research.
Moreover, the Fed stimulus and risk-on attitude is a “huge tailwind for bitcoin and the entire digital asset space,” wrote Mati Greenspan in his daily newsletter Quantum Economics.
The macro backdrop is playing well for the world's leading digital currency. As Mike Novogratz of Galaxy Digital shared, “All the tragic turmoil in the USA adds to the narrative. Budgets are going one way and it’s the opposite of balanced.”
According to him once $10k is broken, bitcoin will “move fast.” Also, we need to watch Gold vs Bitcoin because “if that chart breaks higher it will turbo boost Bitcoin,” he said.
As we reported, already the market is seeing increased interest from institutional investors, with Grayscale and Square consuming all the bitcoin that has been minting after the inflow of bitcoin has been reduced in half.
The idea here is to “stay net long, and reload when it dumps,” said trader and economist Alex Kruger. This is because the bitcoin market has changed with massive stablecoin balances to buy the dip or FOMO in, new macro players, and new quant funds.
The Next Bull Market
Bitcoin has started trending higher but we might just be getting started and actually be at the beginning of the next bull rally.
To take a peek at the past, in 2017 bitcoin jumped from $10,000 to $16,600 in 7 days and then to $20,000 ATH in 17 days.
Nice break for the bulls on Bitcoin.
Structure and breakout very similar to the breakout that preceded the bigger move past 8k & came 30 days after the 2bn print as we saw happened in 2019.
Hold $9859-$10500 squeeze it and send it next week? pic.twitter.com/76nu2N3fhZ
— f i l ₿ f i l ₿ (@filbfilb) June 2, 2020
The S2F model has already printed the red dot, with Bitcoin’s S2F level at 50+ and the phase5 in the making. PlanB pointed out,
“Red dot on bitcoin S2FX model, will this be the start of the bull market again? In 2012-2013 and 2016-2017 red dots started the transition to a new phase.”
$BTC breaking above daily resistance
Showing no mercy to bears and is on route to try to brak above $10,300s
Closing above $10,370 would be insanely bullish pic.twitter.com/0l8YTrJ6Uy
— Josh Rager 📈 (@Josh_Rager) June 1, 2020
Moreover, in the yearly time frame, bitcoin is showing a clear rise in daily active addresses and trading and social volume. Although the flagship cryptocurrency can hold and push towards $11,000 and beyond, in the short term these metrics are looking primed for a decline.
“With these mixed results in network health, we advise staying cautious here,” said Santiment adding we need to wait and see “whether FOMO kicks in now, or profit takers end up taking the safe route with the expectation of buying below $10,000 again.”
Q2 has historically seen price rally so a jump to the upside is expected but the next quarter more often than not prints a corrective leg. Here 21 weekly EMA at $9,451 is key and if we break below it, we could have a corrective pullback just like the one seen in 2015.
But if we move higher, it will be an “absolute bulltard!”
According to analyst Ceteris Paribus, bitcoin breaking through $13,500 or $14,000 and holding at those levels will “signal the next real bull-run.”