In the last week, Bitcoin price has spiked by 39%. In monetary terms, the increase translates to a jump of approximately $2,000. The cryptocurrency’s gains are even more impressive when you consider its low of $3,497 in January this year, the current price representing a 90% increase from the start of this year.
So, does the latest price jump mean that Bitcoin is on the cusp of a bull run or is it a false alarm?
The consensus seems to be veering towards the former.
In a note, analysts Michael Graham and associates Matthew Volpe and Alexander Frankiewicz from investment banking firm Canaccord Genuity wrote that there was a “striking similarity” in Bitcoin’s price action between 2011 and 2015 and its price trajectory between 2015 and 2019. The analysts also referenced an earlier note in which they had mentioned a bottom in the cryptocurrency’s price this spring. “…the implication is a slow climb back towards its all-time high of $20,000 theoretically reaching that level in March 2021,” they wrote.
Mati Greenspan, an analyst with investment firm eToro, told CNBC that Bitcoin was building up momentum. “Bitcoin is still only in the early part of its cycle,” he said, adding that this was only a small rise off a huge retracement in its price. Bitcoin reached a peak price of slightly above $20,000 in December 2017 and has mostly been on a downward slide since.
As Bitcoin goes, so do other coins. All coins within the top ten made gains on the back of Bitcoin’s rise. Bitcoin and Bitcoin Cash were among the biggest gainers. But their rise was eclipsed by Binance Coin, the native cryptocurrency for Binance – the world’s biggest cryptocurrency exchange by volume. Just last week, the coin’s price declined after hackers made away with 7,000 Bitcoin (or, approximately $41 million worth of BTC) from the exchange.
Cryptocurrency markets have registered a 25% increase in their market capitalization. As of this writing, the overall market cap for cryptocurrencies is $230.2 billion.
Why Did Bitcoin’s Price Rise?
Analysts at Canaccord Genuity identified a couple of factors that might be contributing to Bitcoin’s rise. The first one is recent announcements by companies and institutional investors regarding cryptocurrency. Social media behemoth Facebook is expected to announce a cryptocurrency for its network soon while Fidelity has signed on five clients, all of them crypto-native hedge funds, for its custody solution aimed at the industry.
While those initiatives can be construed as bullish developments, they are not new. The cryptocurrency markets had shrugged off previous announcements that were positive.
Regardless of the actual cause for Bitcoin’s bullish movement, the good news for traders is that its jump this time around is accompanied by a rise in trading volume, possibly indicating that the increase this time around has legs. “We are seeing large trade numbers at 4 million per hour, which is four times the normal volume, with people buying on momentum,” stated Charles Hayter, CEO of Crypto Compare, a marketplace for cryptocurrencies.
Interestingly, prices for stocks at NASDAQ crashed today. But Greenspan from eToro discounted the possibility of a correlation between the two markets.