Could The Influx Of Bitcoin Trading Push Crypto Higher?
After months of proverbial CPR, Bitcoin came back to life early last week in a move that came straight out of left field. On Tuesday morning, BTC suddenly rallied, pushing $4,200, $4,400, and $4,800 in rapid succession. Other crypto assets followed close behind the market leader.
Throughout all this, volumes started to surge, as exchanges across the board, whether fraudulent or otherwise, registered trading activity highs. Some see this uptick, which signals an underlying return of interest in cryptocurrencies, as a clear bullish catalyst.
Bitcoin Volumes Boom
In March, Bitwise Asset Management released a scathing report about the state of Bitcoin markets, claiming that 95% of trading activity could be fake. While many saw this as a bearish sign, the firm’s newfangled statistics have allowed traders and investors to gauge conditions with more accuracy.
Bitwise’s Spot Volume Index, which disregards exchanges speculated to be facilitating/taking part in wash trading, in fact, registered a monumental four-hour volume candle on the day it rallied past $4,200. In fact, the candle, which amounted to 154,726 BTC, was the highest since September 15th, 2017. This influx of buying pressure comes, of course, amid a brutal bear market, in which retail investors have all but bitten the dust.
Largest 4H volume candle on the Bitwise Spot Volume Index…
SINCE September 15'th 2017!
— Bitcoin 𝕵ack (@BTC_JackSparrow) April 7, 2019
Volumes registered on the Chicago Mercantile Exchange (CME)’s Bitcoin futures contract, too, has seen a colossal uptick on the day of the aforementioned rally. According to data from the exchange itself, April 4th’s session saw 22,500 contracts, equivalent to 112,700 (paper) BTC, change hands. This is just under double the previous trading activity record, set on February 19th.
CME Bitcoin futures had a record trading day on April 4, hitting an all-time high volume of over 22.5K contracts (112.7K equivalent bitcoin), surpassing previous record of over 18.3K (64.3K equivalent bitcoin) on February 19. More #Bitcoin futures. $BTC_F https://t.co/kWYK203apA pic.twitter.com/CX5nF8dXyv
— CMEGroup (@CMEGroup) April 5, 2019
These two statistics show that Bitcoin’s recent move, which sparked an influx of mainstream media coverage (both negative and positive), has revived investor interest in this asset class. But can it really be sustained?
Related Reading: CME Bitcoin Futures See Record Volumes, Crucial Signal For Rising Institutional Demand
Bears Still In Control Of Crypto?
While monumental volume readings do pose a potential case for further highs in this rally, some are convinced that bears aren’t done playing with Bitcoin just yet. In fact, a multitude of traders has made it clear that investors would be remiss not to expect BTC to establish a fresh low under $3,000, despite analyses stating otherwise.
Jonathan, a forex and crypto asset trader, recently explained that it would be unfair to assume that the bear market is over. Through the medium of a Twitter post, he seemed to hint that proclaiming a bear trend over is irresponsible.
There's a lot of self-congratulating/circle-jerking that "I"/"we" called the bear-market-over bottom & start of the new bull market. Pretty sure this happened w every $BTC rally since Jan 2018. Most of them made that same call, multiple times, in 2018. Should be the same outcome. pic.twitter.com/wzSzx3Onbc
— Jonathan (@jcho710) April 6, 2019
Jonathan remarks that this same cycle of optimists calling for an end to the bear after a short-term, emotion-inducing spike always ended in disaster, looking to Bitcoin’s inability to not maintain upward price action throughout 2018. Technicals have also not painted the more cheery picture.
Nunya Bizniz recently wrote on Twitter that the last time Bitcoin’s one-week Guppy, a technical indicator that weighs moving averages to predict price trends, looked as it is now, BTC rallied into the top of its range, before falling dramatically. Thus, if history repeats, BTC will move to as high as $5,600 in the coming weeks, prior to a rapid sell-off that brings the asset under $3,000.
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