Bitcoin Price Hits $8,939 in New 2019 High; What’s Driving the Hypnotic Rally?

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By CCN: In the U.S. market and on strictly regulated crypto exchanges such as Bitstamp and Coinbase, the bitcoin price surpassed $8,900 to achieve a new 2019 high at $8,939.

Within merely hours, the bitcoin price climbed from $8,000 to $8,939, by more than 11.7 percent against the U.S. dollar.

The bitcoin price records a big overnight rally following six days of stability (source: coinmarketcap.com)

The abrupt upside movement of the bitcoin price follows its 100 percent year-to-date gain against the USD. As of May 27, bitcoin is up 136 percent year-to-date with the “real 10” volume of BTC hovering at $1.6 billion.

The “real 10” volume, which calculates the real daily spot volume of bitcoin by evaluating the volume on exchanges known to have verifiable volume by Bitwise Asset Management, is up nearly seven-fold since March, indicating a clear increase in interest in the asset class.

What are the factors behind bitcoin rally?

Technically, when the bitcoin price surpassed $7,000, analysts including global markets analyst Alex Krüger stated that the dominant crypto asset entered a bull market territory.

The bitcoin price recovered to $7,000 on May 11. Since then, within three weeks, the bitcoin price has added nearly $2,000, rising by 27 percent.

The stunning recovery of bitcoin can be mainly attributed to three factors:

  1. Rise from $3,000 to $7,000 placing bitcoin in a bull market territory, raising momentum
  2. Volume on regulated platforms like CME surging, indicating a significant increase in institutional interest
  3. Volume on exchanges and Google Trends popularity for the keyword “bitcoin” rising, signaling the rebound of interest from retail investors

Behind the three factors is likely the block reward halving of bitcoin that is expected to occur in May 2020.

Every four years, the Bitcoin blockchain network experiences a halving of block rewards which declines the rate in which new BTC is produced by miners.

Miners receive less BTC for their work of securing the blockchain and processing transactions and that leads to a drop in the supply of the asset in the global market.

An impactful fundamental factor like the block reward halving is likely behind other factors such as the rise institutional and retail interest because of the sheer momentum of the crypto market in recent weeks.

The nine percent rally of bitcoin leads the rest of the crypto market to surge

The nine percent rally of bitcoin leads the rest of the crypto market to surge in value (source: coinmarketcap.com)

Earlier this month, when the bitcoin price was hovering at around $7,000, Krüger stated that technical indicators suggest the asset is overbought.

But, he emphasized that due to the momentum of BTC in late 2017, despite the overbought signals, the price went on to achieve a new all-time high at $20,000 from $13,700.

“Last time BTC was this overbought (RSI) on a daily chart was December 6, 2017, with price at $13,700. Back then, a parabolic move ensued,” the analyst said.

Throughout May, even investors who have expressed significant optimism towards the medium to the long-term performance of bitcoin have said that a pullback is likely and that a minor correction would be healthy for the market.

The crypto market has shown no signs of an imminent correction and based on the recent momentum of the market, it is entirely possible that the market continues to climb without a substantial pullback like many expected.

Big predictions coming back

As the bitcoin price achieved a new all-time high off of a 100 percent year-to-date gain, investors have started to reaffirm their long-term forecasts on the asset’s trend.

Max Keiser, an early investor in the crypto venture capital space and the host of Keiser Report on RT, said that bitcoin to $28,000 is still in play, anticipating a surge in price above its record high.

Click here for a real-time bitcoin price chart.

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