Bitcoin price jump: the downward trend is already over?
Lescollons, picture of Torsten Mangner via Flickr.com. License: Creative Commons
Last Thursday the price of Bitcoin and the other cryptocurrencies spontaneously jumped up by a good 10 percent. Since then, an optimistic mood has driven the courses further up. Can you already declare the bear market to be over?
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What a jump. On Thursday at around 12 noon, the Bitcoin price hopped up. Within an hour it was about 5.600 to 6.300 euros increased.
This price increase was observed on all Bitcoin exchanges and extended to all cryptocurrencies. The entire market capitalization jumped from around 275 to around $ 300 billion; The ecosystem had become worth around $ 30 billion more within an hour. Supposedly, such a high trading volume had never been sighted within an hour.
Again you can see that most cryptocurrencies swim with Bitcoin. When it goes up, some coins rise a little faster when it goes down, they fall a little deeper, but on the whole, the market movements of Bitcoin and the other currencies are largely identical. There was no coin that did not benefit from the jump on Thursday. Positive signals are transferred to all stock exchanges and all currencies in seconds.
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Cashcades through the Stop Loss
The reason for this spontaneous outbreak was probably in the cascade effect of the Stop Losses of Margin Tradern on the Bitfinex stock exchange. The explanation is a little, but not too complicated: Bitfinex can trade with levers. This means that you borrow money or bitcoins to bet with a multiple of the use of the future course of the course. Anyone who goes “short” relies on falling who goes “long” on rising prices.
Some traders now secure themselves against losses through so-called stop losses. These are orders that only come into force when a certain price is reached. For example, you can determine that you sell when the price falls below the value X or that you buy when it rises via Y. Many Margin traders use this instrument to secure profits or reduce potential losses.
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Shortly before the jump on Thursday, the amount of shorts was on an all -time high. However, since the price was not sank, but remained stable or even slightly climb, this triggered the stop-without purchase order. This now had a cascade effect because the purchase order drove up the price, which activated even more stop-loss order. On Thursday, the shorts were over almost 40 on Thursday.000 bitcoins liquidated.
The financial industry remains hungry
The most amazing thing about this jump is not that it happened – but that the level could last. One could have expected that the markets were waving the profits and the courses fell again after a short time. But this did not happen. The price not only remained at a higher level, but also rose even further.
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The bulls had probably licked blood. Over the weekend, the Bitcoin price rose up to 6.750 euros, and the market capitalization of all cryptocoins reached almost $ 340 billion. This is an increase of a good quarter within a few days. Such a violent movement could show that Bitcoin at around 5.500 euros has reached a floor and that the markets rate this course as a purchase signal.
This is flanked by some fantastic good news: We have already mentioned that the Stuttgart stock exchange will soon bring the Bitcoin trade to your customers through a subsidiary. In the United States, too, the financial industry continues to have a major appetite for digital coins: the asset management of trading legend George Soros has recently announced that it should start trading virtual currencies-although Soros himself used to be critical of Bitcoin. One could understand this as the surrender of a permers. In addition to Soros, Bloomberg’s article, which brings this message, calls other large funds and billionaires who want to start in cryptocurrencies. Shortly afterwards, Venrock also stated that an investment company of the Rockefellers was to build a position in cryptocoins.
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The big bladder at the end of the year has burst and the bear markets seemed to have broken out – but the big fish in financial business therefore do not move away from their plans to shop in the market. The purchase pressure is obviously still strong, and can remain for a while. There is a large reservoir of very rich people who still want to invest in cryptocurrencies.
No reason for too much optimism – but also not for too little
However, one should not describe the return of the bull market too quickly. Because the charts look very promising in the one-week cut, but are not quite as friendly from a further perspective.
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The 3-month course shows a typical bear market full of bull traps: Whenever it goes up, the price only falls even more afterwards. There were also stronger relaxation than on the weekend, which have also dragged on for weeks. It would be conceivable that this scheme is repeated again. After all, the course has trained something in the past few weeks, which looks a bit like the ground. The volatility decreases what could be a good sign in this situation.
And now we increase the resolution a bit and look at the course of the course of the past six months. If we look at this, you might think that the bladder that developed at the end of last year has largely broken down. This would be a good basis to continue sideways, i.e. neither to rise nor fall, which would certainly be good news for the development of the ecosystem.
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When we look at the 1-year chart, we even see that a mild upward trend is still intact. The stricter climb that started around October or November would be corrected, but the long -term line that has been with us since the beginning of 2017 would have been unbroken.
But, as so often, one should remind you that the past say little about the future and that it is the charts that imitate the courses and not the other way around. What will happen will probably surprise us anyway.