Evaluating Bitcoin’s Early April Price Surge

Editor
Editor
Apr 10, 2019 · 4 min read

Bitcoin’s price climbed past $5,000 earlier this week where it remains now following a brief pullback below $5,000. The positive price movement has coincided with a market-wide surge in altcoins — indicating that Bitcoin and the broader market are still closely correlated.

Speculation has been rife about the fundamental causes of the long-awaited breakout in Bitcoin’s price from its doldrum changes over the last several months. From a $100 million mystery buy order across three prominent exchanges to numerous OTC Bitcoin bids late Monday night to new metrics indicating BTC’s bottom accumulation trend has begun, the answers to surges in Bitcoin’s price are often convoluted.

Besides exploring singular causes of Bitcoin’s price sentiment reversal, it is often a confluence of factors that drive major trends in its spot price and broader sentiment in the community.

Exploring the Numerous Potential Causes in Bitcoin’s Surge

Bitcoin’s mining difficulty adjustment jumped for the first time in over a month almost two weeks ago following an extended period of hash rate consolidation. Both point to the notion that miners are once again operating on the chain, and recent developments from several mining firms investing in more hardware in the run-up to summer also supplement such a narrative.

While the mining market is more revealing of significant macro-trends, other network metrics can provide more intimate insights into short-term trend reversals.

Willy Woo, a highly respected analytics professional in the crypto space, detailed how he and Murad Mahmudov were evaluating why on-chain volume metrics looked bearish while their other metrics revealed a much more positive sentiment. They concluded that they needed improved on-chain metrics from CoinMetrics, which exposed the accumulation bottom of Bitcoin is well underway — indicating a bullish market sentiment.

The new metrics from CoinMetrics concerned on-chain transaction volume and have received widespread support and positive signalling from market analysts.

Another leading cause for Bitcoin’s price surged that has been touted over the last several days derives from Reuters’ reporting of three buy orders spread across three exchanges for roughly $100 million of BTC. The exchanges were Coinbase, Kraken, and Bitstamp.

Whales have shown their impact on moving Bitcoin’s price needle before, and it would not be surprising if the $100 million buy order sparked an upward spring in the price.

In a similar scope, the DRW-run crypto OTC shop, Cumberland, tweeted how post-trade analysis of Monday (04/01) evening indicated a series of large bids of more than 1,000 BTC each in the span of only 1 hour. They subsequently unveiled that the more than 10 percent price movement in Bitcoin’s price for the first time in 2 months had them observing strong resistance around the $5,800 mark — a historically strong resistance point for the legacy cryptocurrency.

Other bullish sentiments from outsized market players include the volatility report by SFOX, an institutional prime-dealer in crypto, which detailed how their ‘Multi-Factor Market Index’ swayed from ‘moderately bearish’ at the start of 2019 to ‘moderately bullish’ in March.

Broader Positive Sentiment in The Crypto Markets

The correlation between Bitcoin and other assets declined somewhat throughout the bear market, but it appears major market moves of altcoins are still broadly coupled to Bitcoin’s sentiment. In particular, Bitcoin Cash and Dogecoin had amplified responses to Bitcoin’s rise, posting the highest percentage gains against both the USD and Bitcoin.

Whether or not the market can sustain the strong movements over the last several days is unclear and will likely unfold as Bitcoin approaches its $5,800 resistance or falls back below $5,000 and continues to drawback on the recent surge.

Moving Forward

Bitcoin’s difficulty adjustment is set to make a move over the next couple of days, which has some potential for strong indicators. Should the difficulty adjustment bump up again, especially a striking change, then that would be a robust measure for Bitcoin’s mining economy gathering momentum and potentially reversing the extended bear market throughout 2018.

Investors have waited a long time for Bitcoin’s price to break out once again. Even some small positive indicators may very well push the market upwards as the mainstream jostles to get in before another bull run and institutions loom on the edge of full entry into the market.

The recent spark in price energy of Bitcoin and altcoins may have been led by massive whale buy orders or could have been the result of a convoluted set of factors. Observers consistently seek the singular cause like the former, but it is usually the latter that has defined Bitcoin’s price — continually leading to speculation, better network metrics, and a more prudent approach to industry developments than in 2017.

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