Bitcoin’s price recorded an impressive 19 percent rally from $4,200 to nearly $5,000 while market capitalization increased by $20 billion within the span of an hour.
In the past month, fueled by the strong performance of crypto assets and alternative cryptocurrencies, the valuation of the crypto market rose by more than $40 billion from $125 billion to $166 billion.
Will Bitcoin Continue to Surge?
The overnight rally of cryptocurrencies is said to have been primarily triggered by the liquidation of short contracts worth more than $500 million: a short squeeze.
when you short $BTC https://t.co/UQW2x0Y5NH
— CZ Binance (@cz_binance) April 2, 2019
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The cryptocurrency market needed considerable stimulus to pass the $4,200 resistance level, which in itself required buyers to absorb an $80 million sell wall. The liquidation of short contracts served as a proper catalyst to bitcoin’s near-term movement.
This large movement was necessary because of bitcoin’s extended period of stability from January to March. The last time the price of the dominant cryptocurrency was stagnant for three months a 50 percent plunge in price followed.
The rally in the price of bitcoin following weeks of strong upside movement by alternative cryptocurrencies was somewhat expected. Some technical analysts were anticipating that investors cash out their returns from high-risk trades back into bitcoin.
Initially, only bitcoin recorded strong gains on early Tuesday morning as capital flowed back into BTC from altcoins. However, by evening, both bitcoin and alternative cryptocurrencies began to surge simultaneously, suggesting that a new inflow of capital is triggering the recovery of the crypto market.
There’s Already $6 Billion in Crypto
Previously, Three Arrows Capital CEO Su Zhu said that the cryptocurrency markets do not need the inflow of external capital to rebound.
Zhu explained that nearly $6 billion are stored in stablecoins, on exchanges, and cryptocurrency funds. These funds are sitting on the sidelines waiting to be allocated into crypto assets in the medium-term. As Zhu stated:
“There’s an estimated $2 billion in cash sitting at crypto funds/holdcos [holding corporations]. There’s another $2 billion+ sitting in stablecoins, and another $2 billion sitting at exchanges/silvergate/signature. This is $6 billion in fiat already onboarded to crypto to buy your bags. Imagine thinking we need new money to hit $10,000.”
If the funds on the sidelines of the cryptocurrency market move, considering that the overwhelming majority of bitcoin volumes are inflated and that the real daily volume of bitcoin is estimated to be below $1 billion, it could help fuel the momentum of both BTC and the rest of the cryptocurrency market.
Volume Exploding
While volume is rising to all-time high levels on exchanges like Binance, there is less sell pressure in the mid-$4,000 region than at $4,200 and below.
$BTC buy volume at an all time high on Binance. pic.twitter.com/inxCpaEM7J
— Galaxy (@galaxyBTC) April 2, 2019
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Consequently, assets such as Bitcoin Cash (BCH), Litecoin (LTC), and EOS recorded gains in the range of 15 to 33 percent, with BCH leading the market as the best performing cryptocurrency of the day.
The post Following bitcoin’s 19% surge, crypto explodes: bull market in the works? appeared first on CryptoSlate.
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