Bitcoin Delivering Several Major Bullish Signals
Bitcoin price movement has moved back to the foreground of crypto news in the last two weeks as we have seen several resistance levels get broken through. A new high of $5,600 has been broken and consistently higher lows are occurring, which is just another source of exuberance in the markets.
The strongest indicator of all is Bitcoin forming its first golden cross since October 2015. A golden cross is when the ratio of the 50-moving average to the 200-day moving average breaks through 1.0. A “death cross” (the opposite of a golden cross) occurred in Q2 2018 when the crypto winter began, and this is being seen as the definitive “end” of the crypto winter.
There is something to be said for market sentiments being self-fulfilling. If a large group of people make a prediction and put the weight of their money behind it, it can actually occur. This is essentially what a “pump” is, and now the question is whether this trend will be sustained and how much new money will flow into the space.
We are seeing constant talk of Bitcoin hitting $6,000 at some point, which would be a major milestone and yet another signal of a forthcoming bull run. At the same time, many are hesitant to push significant amounts of money into the space for fear there will be a drop in prices when this run loses momentum.
Short Squeeze Creating Momentum
Bitcoin bulls are starting to squeeze short positions right now, as more and more shorts are becoming exposed to liquidation. Short squeezes are often a source of bullish momentum since they require the short sellers to purchase Bitcoin in order to settle their positions. It becomes an artificial form of long positions.
We are also seeing some new fundamental developments to Bitcoin, as crypto startup Moon announces a bridge to Amazon that will allow users with lightning-enabled wallets to make purchases in crypto. Moon acts as a conversion mechanism for crypto, and Amazon never actually holds any cryptocurrency, but it is notable that this is now possible. In addition, Moon enables any e-commerce website to be accessed by these wallets, which improves the “usability” of Bitcoin.
What Will Bring Bitcoin to New Highs
Finding potential use cases for Bitcoin and making it easier to spend has been a major priority of developers during this bear market, and should hopefully deliver a major fundamental reason why crypto should push to new highs.
These bullish sentiments are fairly consistent across the board, with the other 4 top cryptocurrencies (Ethereum, XRP, Bitcoin Cash, and EOS) all being “in the green” at the time of writing this. The implications of these high correlation price swings are that it is an overall improvement in the sentiments toward cryptocurrencies, rather than a fundamental improvement in any single coin.
Bitcoin maximalists are those who believe there will only ever be one “dominant” coin and they mostly invest in other coins as a hedge rather than believing in potential coexistence. Bitcoin’s dominance (the percentage of total crypto market capitalization that it occupied) is around 53% right now, and its price is definitely serving as a leading indicator for all the investors trying to make predictions about the future price performance of the sector.