Bitcoin (BTC) is the most popular cryptocurrency in the world. Recently, the price of it has gone up significantly. Why did that happen? What should we expect next? Is it sustainable? Check out our analysis.
The beginning of April brought a lot of movement in the cryptocurrency market, which we had not seen for a long time. Bitcoin’s ratings showed an average increase of 20% which was due to the breaking of $5,300 line for the first time since November last year. Is this a sure sign of recovery? Are we over the hump?
Experts theorize about the causes of the current state of affairs and give two possible reasons:
- Deconomy forum in Seoul, one of the most important events in the field of decentralized economy. Speculation at such events can sometimes influence the price of cryptocurrencies;
- on April 1, there was an article published by Finance Magnates which indicated that SEC approved ETFs (exchange-traded funds) based on bitcoin after an extraordinary meeting on that Saturday.
However, those explanations have not been confirmed in any way, and the article was only an April Fool’s joke. It is doubtful, therefore, that this could affect the stock market in any real way.
The ‘flash crash’ theory
There are significant changes in the cryptocurrency market, which are difficult to explain with a specific one cause. Often these so-called “flash crashes”, sudden, several-percent decreases or increases in the price of a given currency are related to the implementation of the stop losses (orders protecting against losses).
With the more speculative nature of the market, a flash crash can cause time intervals of relative calm to be seen as something unnatural. Regardless of possible factors that could have caused the recorded increases, they were substantial, even for cryptocurrencies.
Bitcoin has already shown much more significant gains, but it should be pointed out that we have witnessed a considerable price activity that we have not seen for a long time.
The chart analysis
Currently, Bitcoin is in a very interesting place from the point of view of technical analysis. After the spike, the market is in the consolidation phase, catching the breath for further movements at the tops. From analyzing the daily chart, the current level may be a turning point for a short-term downward correction to the level of the nearest support line (around $4,700).
If the supply exceeds this level, it will reach around $4,300, where the breakout was initiated. However, we do not exclude a further upward wave to the level of $5,400 (the first level in which the price rebounded during November drops) or its breakdown and continuation of the upward surge to $5750.
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