The Recent Bitcoin Rally Was Prompted Solely by Technical Factors
Scroll DownIn the two and one-half months since December 18, 2019, the price of Bitcoin has surged by 68 percent in comparison to the United States dollar. Bitcoin's value reached the $10,000 mark on February 9, indicating a big rally for the cryptocurrency market. The sentiment about it is varied. One investor thinks that the price is being manipulated.
Other investors, such as Adaptive Capital's partner Willy Woo and the CEO of Three Arrows CApital, Su Zhu, said that some technical factors are the cause for the rally. Zhu explained that when the value of Bitcoin was around $7,000, the premium of the Bitcoin to United States dollar indicated an accumulation phase was beginning in Asia.
There are as many explanations for the Bitcoin surge as there are investors. In general, there are three categories of reasons why Bitcoin surged. One is the accumulation since December 2019. Another is that on-chain data suggest a rise in investor activity. The final reason is a potential manipulation by market whales.
In regards to accumulation, Zhu explained in December that this could trigger a value of $9,000 by January's close. The demand for both Tether and Bitcoin grew. The Bitcoin reward halving scheduled for May also could be a reason for the accumulation.
Whale manipulation could also be a reason. Spoof orders and fake walls could be involved. One person said that they plan to cash out in the end. Over-leveraging could reduce market liquidity. The spoof orders could artificially boost Bitcoin's pricing. As the price went up, short contracts were eliminated. This further boosted the spike.
Looking at investor activity on-chain, Woo explained that the chances of Bitcoin stopping at $10,000 are close to zero. Woo gave several points of data as pricing explanations. The RVT ratio was one explanation. It is also possible that Bitcoin's meteoric rise is a result of a combination of all three of these factors. The whales could have started it by manipulating with spoof orders. This caused real people with genuine orders to get interested. The upcoming halving reward could also play a role in its value.
Comments