Slowly, but surely, bitcoin is making its way out of the woods.
After the sudden spike in its price last week, the original cryptocurrency experienced another sharp increase Monday morning to post a two-month high. Two months ago, bitcoin was trading at $7502.56, with the cryptocurrency on a downward slide since then. At 08:00 UTC Monday morning, bitcoin reached a high of $7745.99, representing an increase of more than $300 in less than a couple of hours. And that increase hasn’t stopped, with bitcoin sitting at roughly $8200 at the time of writing. (See also: Bitcoin Price And Crypto Markets Shot Up Earlier This Week. Why?)
Bitcoin’s technical fundamentals were primed for an increase in its price. Several technical analysts had called out the rise because they spotted an “inverse head and shoulders” pattern in its price. According to this pattern, the price of a security alternates between successive troughs before breaking out into a new high.
Analysts at Coindesk also make the case for bitcoin dominance in cryptocurrency markets as a key indicator of its price movement. As crypto markets have bottomed, bitcoin’s dominance rate has decreased because investors have diversified their holdings into other cryptocurrencies to eke out profits. “The fact that the BTC price rally from the seven-month lows below $6,000 is accompanied by the sharp rise in the dominance rate indicates the bargain hunters are likely betting on further sustainable gains in BTC prices and are not buying BTC to venture into alternative cryptocurrencies,” the publication’s analysts write. “So, a sharp rise in the BTC dominance rate, as seen in the last four weeks, could be considered a sign of investor confidence in the current BTC price rally.”
A surge of positive news developments has also marked the cryptocurrency ecosystem’s recent highs. The SEC is said to be considering the prospect of bitcoin ETFs again. Their introduction is expected to make cryptocurrencies accessible to common investors and inject liquidity into the markets. Further capital is expected to follow in the form of institutional investors.
In other news, prominent cryptocurrency startups Coinbase and Ledger recently announced custody solutions aimed at luring institutional investors. Adam White, vice president at Coinbase, recently told CNBC that the company was planning to add a third tranche of institutional investors to its customer list. (See also: Coinbase Tries To Reel In Institutional Investors). Unlocking the barriers to the flow of capital along with advances in establishing a regulatory framework for bitcoin will help open the gates for institutional money into the cryptocurrency. It is likely that the current hike in prices is a vote of confidence from investors, responding to these promising developments.
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