5 key points to understand the rise of Bitcoin
The overall crypto market generates profits as Bitcoin’s rise takes hold. Here are 5 key points to understand the price increase. The BTC price has resumed bullish expectations for the short and medium term.
1. The proximity of Halving is the main reason for Bitcoin’s rise
The influence of the information about the possible impact of Halving on investor sentiment is more than clear. More and more news reports about the prompt arrival of the protocol of halving the rewards, and issuance of the remaining coins.
Many support the vision of a bitcoin price rise, relying primarily on supply and demand theory. The lower the supply of Bitcoin, with a stable or increasing demand, the price should increase. Others think that in the short term it could be negative, due to the possible outflow of computing power, in the midst of a situation where it is not profitable to practice mining, or even a massive sale of Bitcoin seeking to face production costs before Halving happen.
Indeed, the weakest will eventually have to exit the chain, if the price of Bitcoin is not enough for mining to be a profitable activity. However, it is well known that those who control most of the hash rate are few but powerful groups, and they have already been preparing, acquiring more efficient equipment, and making long-term contracts with electricity providers.
There is a lot of interest behind Bitcoin, and it’s hard to think of what they will let the project die right now. The current rise is also part of an attempt to make the price profitable for mining, possibly eliminating as many negative probabilities for when Halving occurs.
Within days of the long-awaited event happening, transaction volumes on major exchanges have risen to all-time highs. Binance, for example, peaked at $ 15 trillion in volume in 24 hours, when last year it had a daily average of $ 2.9 trillion. There is no doubt that interest is increasing exponentially, and the expected rise could be discounting.
2. Institutional investment created a cushion for bulls
According to a recent Grayscale report, during the 1st quarter of this 2020, a large inflow of institutional capital has occurred to the crypto market, indicating that 88% of investment comes from institutions, mainly hedge funds. This entry of bullish positions has been made systematically, and mostly for the long term. This with the increase in retail interest, created an excellent scenario to provoke a rise in Bitcoin.
3. Whales support the rise of Bitcoin
As BTC continues to rise, the whales continue to accumulate. Profit taking does not appear to be a priority, thus demonstrating the vision of large investors in long-term appreciation.
The 7-day moving average of the number of addresses holding 10,000 Bitcoins or more increased to 111, the highest number since August 2019, this according to data provided by Glassnode.
4. Bitcoin enters optimism phase
According to a Glassnode metric, Bitcoin’s market sentiment has moved into the optimism zone, leaving the fear phase behind. The optimism phase is generally accompanied by a rise in the price, and is the beginning of a continuation of the trend, if the phase has only recently started.
The escape of the price in search of new resistance has encouraged investors to keep their positions long, and could lead to the stage where sentiment is believed, reached during important highs.
5. Consolidation exit from the top
After Bitcoin reached a relevant support zone around USD 4,000, the bulls quickly entered to defend the price, and generated a rise in the form of a recovery. However, this rise did not have much strength, which ended up generating a consolidation with direction, known as a bullish wedge. Despite being in theory a continuation formation of the previous trend, the price had already reached a zone of important lows, so a reversal was viable.
The technical odds were in favor of a further decline, thanks to a visible weakness on the buying side. However, nothing was confirmed until some of the ascending wedge limits were broken. With fundamental factors supporting the recovery of the Bitcoin price, the resistance was broken with an explosive movement, as usually happens.
This Bitcoin rise led to the price rising more than $ 1,000 in a matter of hours, completely eliminating bearish intentions for the short term.
Within days of Halving occurring, the price of Bitcoin should continue to rise, if the effects of the reduced reward for miners are expected to be less than negative.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.