How Bitcoin (BTC) Surged Above $15,000 (Fundamental and Technical Analysis)
With the current price of Bitcoin (BTC) well above $15,000, we are here to see if the latest surge was of a technical or fundamental nature (or both). Therefore, we are going to take a look at all the aspects of the latest market’s ongoings to answer that question and dissect how it relates to FXF token holders.
Since early September, Bitcoin investors fueled the 58 % rally as the price of the pivotal cryptocurrency went from $9,800 to $15,600 in only 63 days. Today’s BTC price is the highest since January 2018. However, the rest of the market, which is usually more volatile than BTC, failed to follow as the majority of altcoins are looking to end the week bleeding. This discrepancy is not accidental so in the next paragraphs, we shall provide an explanation of the present situation.
The Fundamentals
Before we start talking about the most recent Bitcoin-related news, let’s deduce the strongest reason behind the renewed enthusiasm in the crypto market during the last and the ongoing fiscal quarter.
Bitcoin Halving
On May 11th, 2020, Bitcoin underwent another halving. This means that the reward for miners who secure the network was halved from 12.5 to 6.25 coins per block mined. Since Bitcoin’s miners’ reward halves every 210,000 blocks, and counting in the block time, we realize that such an event happens approximately every 4 years in order to gradually limit the inflation rate. In turn, Bitcoin becomes more scarce which adds to its value as an asset.
Historically, the last two halvings (in 2012 and 2016) led to Bitcoin hitting its new ATH (all-time-high) roughly a year after the event took place. Since markets tend to behave cyclically, it is most probable that this surge was highly influenced by the halving.
The PayPal Support
As we already reported, on October 21st, PayPal announced that its world-famous mobile app will support cryptocurrency transactions, with Bitcoin as the main player. Such a huge fundamental piece of news couldn’t pass unnoticed by the crypto investors who immediately started pushing the BTC price upwards.
As we can see in the BTC/USD daily chart below, the PayPal announcement alone pushed the price of Bitcoin up by 34%.
The Technical Analysis
Despite the fundamental analysis having a huge influence on the current market sentiment towards Bitcoin, experienced traders will never fail to recognize the importance of a technical aspect of the trading game. Therefore, let’s see if there were any technical reasons behind the Bitcoin rally and were technicalities able to predict what happened to the king of crypto during the last two months.
Bitcoin is in the Ascending Channel Formation
Since March, we can view the BTC price movement through two rising channels. The big channel (in the chart below, red) is a wider one and its higher highs still provide resistance for bitcoin. The smaller one (in the chart below, white) kept Bitcoin inside its boundaries until yesterday when BTC recorded the last surge and broken through the channel’s resistance level at $14,000.
Low Volume With a Possible RSI divergence
Despite the great results for those who went long on Bitcoin, traders should analyze the way that BTC got where it is today.
All technical indicators show that Bitcoin is highly overbought. The chart below reveals that the RSI is deep above 70, which is the case since October 21st (the PayPal announcement). In such market conditions, it is always good to reach in for some historical data. Therefore, the daily chart below shows that this peak was reached with Bitcoin’s RSI not surpassing the one recorded during the former peak.
Technical analysis basics teach that such occurrences are mostly unhealthy for the mid-term growth of an asset. Especially if the rally isn’t supported by a high trading volume. Therefore, let’s see if the volume followed the price.
As it is visible in the chart above, the trading volume Bitcoin recorded during the surges has been declining since the big sell-off that happened in March this year. Naturally, it is now a question if Bitcoin can hold onto the newfound high with lower trading volume.
Nevertheless, the global greed for Bitcoin remains ever-present and it is perfectly depicted by the greed/fear index which helps to analyze the overall market sentiment towards the asset.
As the image above confirms, Bitcoin is currently in the area of extreme greed, which is a complete opposite of the investors’ sentiment towards BTC only a month ago. This reaffirms the highly volatile nature of cryptocurrencies as wild swings still rule the industry. Furthermore, the current enormous greed could foreshadow the coming events because, as a world-renown trader, Warren Buffet said; “be fearful when others are greedy, and be greedy when others are fearful”.
The Untested Fibonacci Level
Since the Fibonacci retracement is one of the oldest and, therefore, unavoidable tools in technical analysis, we are also going to take a look at how Bitcoin behaves in relation to Fibonacci levels on a weekly chart.
By zooming out to a weekly chart, we have a nice overview of Bitcoin’s price movement since the last ATH. It is clearly visible on the chart above how most peaks correlate to Fibonacci levels. However, the 0.236 level we reached today around $15,600 is still untested, and usually, either in a bull or bear market, such important levels are tested and contested by the sellers or buyers before the price continues on its trajectory or hits a firm resistance.
How These Market Conditions Relate to FXF
Looking at market conditions from Finxflo’s angle, things could not get any better for FXF. The cryptocurrency market is slowly but surely reaching levels not seen since the great bull run of 2017. In that situation, Finxflo will come into the market with a groundbreaking product both in DeFi and CeFi ecosystem.
Market insiders understand that this means a much greater possibility for FXF token appreciation once it hits the market in 2021. Analogically, this will have a highly positive impact on early investors.
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