Bitcoin Breaks Through $5K for First Time in 4 Months
Bitcoin enthusiasts woke up to a pleasant surprise on April 2nd, as Bitcoin surpassed the $5K price level for the first time since November 2018. There is constant discussion regarding the transition from bear to bull market, but this might be the proof that the shift has occurred.
The next price level investors will look for Bitcoin to break is $5,200, which represents the current 20-month moving average. Until recently it, served as support to the coin, but now it has turned into a resistance point Bitcoin will need to bust through in order to enter the bull market everyone is waiting for.
Moving averages are a technical indicator which tends to indicate long-term trends. The greater the duration of the moving average, the more powerful the trend. It helps traders to ignore short-term fluctuations and find a more “stable” version of the price. This is the first time Bitcoin has traded above the 50-, 100-, and 200- day moving average since January 2018.
A more likely event to occur is a pull back to the mid $4,000’s in the next few days. The trend could exhaust itself, but this quick pump is rare good news for Bitcoin these days.
Beginning of a Bull Market?
There have been numerous qualitative bullish developments for Bitcoin in the last few months, but this is the first price action that reflects it. As we near the approval of an ETF, institutions continue (or even begin) to put more money into Bitcoin, and more investors/thought leaders come out in support of the ideology, it is possible it may soon enter the mainstream again.
The question is: what will be the catalyst for the price increase that begins the next bull market? Nothing stands out as being a clear explanation for why Bitcoin would suddenly jump up so much in price on today of all days, but it happened. It is often theorized that a shift in the dynamics of the overall economy would be the catalyst, but there could also be a trigger from somewhere within the crypto industry (like the Lightning network or another development) that begins the shift.
What many are looking for is Bitcoin to break its 15 month long bear trend and begin to show some upward momentum. As much as the fundamentals of other cryptocurrencies matter to their price, there is still a significant correlation between them and Bitcoin. So a reversal of the trend could mean a bull market across the board.
Litecoin, Cardano, and Monero also experienced gains in the double digits, which might be a sign that these cryptocurrencies are more primed to “take off” in the next bull market. Ethereum and Ripple went up a less significant 5%, which makes it seem like they are more fairly priced right now. The differential between these price increases will likely exaggerated as we enter the next bull market.
The 15-20% gain represented by the current trading levels around the $4,800’s would be a strong outlier for any other market, but tends to be considered more “standard” for the cryptocurrency market. It really depends on whether the prices sag back down to earlier levels, or if this turns into a sustained and supported trend.