Bitcoin Flirting with $4k – Another Pump-and-Dump?

BTCUSD Header 2019-02-19

Bitcoin’s latest price rally took the value of a unit of the biggest cryptocurrency close to the $4k mark. While the initial excitement around this pump may have fizzled out, there are signs out there that it may in fact be different from other pumps we have witnessed over the last few months.

So is this the end of the bear market or just another pump-and-dump?  

The technical factors surrounding this rally are indeed very bullish, and there are a few that stand out by a head and a shoulder. But let us not be carried away by these bullish vibes.

What exactly are we looking at? The spark that flamed into the current rally was generated by ETH. The rest of the crypto world sort of just followed in ETH’s footsteps. From Bitcoin’s point of view, that simply does not provide much substance.

Still, the technical constellation has not been this favorable for months. First of all: the rally has been accompanied by massive trading volumes. This could indeed indicate that the current pump may be more “organic” than its recent peers.

The 24h Bitcoin trading volume exceeded $9.9 billion on the day of the pump. The last time a 24h trading volume that large was logged, was back in May, 2018.

Another comparable milestone was achieved with the breaking of the 100-day MA, for the first time in 272 days.

BTCUSD Chart 2019-02-19

While the bulls still haven’t shown enough momentum to make this rally a potentially bear market-ending one, they have shown increasing willingness to commit.

Of the above milestones, the crossing of the 100-day MA appears to be the more tenuous accomplishment. Located at the $3,850 mark, the MA has already drawn the price back from highs of $3,950. Currently trading at $3,919 though, it seems poised to head upward again, after a breather.

To lend proper credence to the bullish case, the price needs to beat another key resistance level. Located at $4,075, this level is defined by the upper trend-line of the triangle pattern generated by the progressively lower highs drawn over the last couple of months.

If that resistance is breached, the price will head to the psychological resistance of $5k in short order.

The downside is that indecision on the part of the bulls at the current price level may result in exhaustion and another selloff that might mimic the November 2018 drop.

What do the fundamentals say though? Do they play into the bullish feels of the day?  

A lot of importance has been given to the volume fluctuations accompanying the current rally. Without downplaying the significance of these increased volumes, it may make sense to look past them this time, to the OTC markets.

OTC trading has made up a massive chunk of BTC trading lately, and its share in this regard may be increasing. Just as the discussed rally was unfolding, LocalBitcoins’ USD trading volume quadrupled.

What this means is that people are increasingly turning to OTC solutions for various reasons. Such reasons may be privacy-related ones, or they may simply reflect basic market mechanics.

In other news: mining giant Bitmain has apparently logged losses amounting to $500 million in the third quarter of 2018. The dismal performance is a direct consequence of the bear market blues.

As mining became less and less profitable, more miners turned off their ASICs and fewer considered buying new equipment.

The loss may negatively impact Bitmain’s efforts to launch an IPO through the Hong Kong Stock Exchange.

Meanwhile, in Thailand, a virtual crypto mining scam has swindled some 140 people out of funds totaling $1.3 million. The incident further highlights the necessity for tougher regulation of the crypto space.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.