Forex and Crypto News

Some reasons for Bitcoin’s growth

12:16 10 April /2019

Cryptomarkets have been under pressure from bears for more than a year and market correction was quite expected. In addition to the volatility of other features inherent in the financial market, here we have the fundamental factors expressed in the development of the blockchain technology and its adoption.

If we return to the April growth of Bitcoin and the growth of the cryptocurrency market as a whole, several reasons for growth were put forward. Some are quite interesting and we would like to consider them.

In one of the theories, Bloomberg explains the sharp rise in the Bitcoin rate by reducing the number of inactive Bitcoin wallets. If a year ago their number was 40-50% of all wallets, then by March 15 their number was 10%. Most often, such price movements are provoked by major market players, the so-called whales. But this time, the activity of many small and medium Bitcoin wallets has also increased markedly in recent months.

bitcoin wallets.png

The second theory is based on algorithmic trading. It uses automated software designed to identify trends and ideal opportunities for high-frequency trading. From September 2018, algorithmic crypto traders began to rise. Crypto Funds Research reported that their number is more than 40% of the number of all cryptocurrency hedge funds. Therefore, it can be assumed that a 20% increase in the price of Bitcoin was caused by an algorithmic trading software that was programmed to execute a Buy order worth more than $100 million on three large crypto exchanges: Coinbase, Kraken, and Bitstamp.

In our opinion, the price charts and several classical indicators are quite capable of explaining this price increase. BTC/USD 1H chart shows that the level achieved as a result of a sharp rise on April 2, with a support line for a bullish trend, seems to be kept quite confidently. Now it seems likely that the consolidation period will continue, with the first support level of $4800. The next important resistance level on the daily chart is at $5850. The breakout of this level will signal a bullish trend in the medium term. 

btcusd-10-April.jpg

Also on the daily chart, you can see that the 20-day EMA (exponential moving average) crossed the 50-day EMA at the end of February, which can also signal that the bottom of the crypto market has already been formed and the transition to a bullish trend is beginning. The RSI (relative strength index) moves in an upward trajectory, MACD also indicates the strengthening. However, note that the RSI is already in the overbought zone (> 70), and some correction from the current price levels may occur. To summarize, it looks like BTC is getting ready to finally emerge from a bearish trend. Crypto bulls should be satisfied ...

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