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Peter Kimani

Is the crypto bull run finally underway given bitcoin's latest rally?

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It’s hard to say that a bull run is underway for any type of asset following a one-day rally, but by examining other fundamental and technical factors we can try to predict whether a rally phase could last for a long time.

A bull run is typically defined as the absence of a 20% or more retracement in a particular asset class for a sustained period of time, which usually refers to several months or years.

We shall use the same definition to assess whether today’s bitcoin rally, which saw it surpass the $8,100 mark, is a sign that the crypto markets are ready to rally for the next few months.

The technical case for a bull run by bitcoin is supported by the fact that the cryptocurrency is currently trading above its 200-week moving average, which is a popular indicator used to determine whether an asset is in a bull trend, and in this case, it indicates that bitcoin is bullish.

The fundamental case for bitcoin’s bull run is based on the fact that institutional interest in bitcoin is at an all-time high, which is likely to drive its price much higher.

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Cryptocurrencies have earned infamy for how wide their price volatility can swing. Bitcoin, whose price rose to $20,000 prior to falling to $3,200 within a year, is a prime example. Crypto volatility, against NASDAQ 100 index volatility, has yet to fall lower, Bloomberg data shows.
Similar data reveals the last time this comparative metric fell so low was the onset of the previous cryptocurrency bull market. Bitcoin is therefore gearing up for another bull market. Every crypto asset fundamental is screaming buy.
Technical analysis data reveals sustained uptrend pressure once Bitcoin clears current overhead resistance. However, Bitcoin faces challenges in rising above the $10,000 resistance point.
Bitcoin has consolidated for weeks below this resistance level leading to lower volatility. This resistance shows low levels of volatility correlations against NASDAQ 100. The last time Bitcoin versus NASDAQ went this low saw the start of a bitcoin bull run, according to Bloomberg analytics.
 

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Hi Peter, thanks for the question. 

Just when we thought that the Bitcoin price is ready to break above $10,000 and launch higher, another failure took place. The buyers failed to move above $10,000 again to force another failure and return below $9,500. 

It’s difficult to name a clear reason why Bitcoin failed at this level again. It is believed that the crypto market followed the stock market lower as stocks recorded one of the worst days since March.

The number of infections has continued to rise in the United States and globally. 

“It is a disaster that spreads. It’s not like there’s an entire continental seismic shift and everyone feels the shaking all at once,” said Dr. Jay Butler.

The latest surge in infractions has worried investors that stay-at-home orders may return.

“Given the magnitude of the rally, it would shock me if we had a one day sell-off and that’s it,” said Morgan Stanley Investment Management’s Andrew Slimmon.

Major U.S. indexes fell around 5%, which most likely dragged Bitcoin lower, closing 6.37% on Thursday. One day earlier, Bitcoin tagged the $10,000 handle, failed, rotated lower to touch $9,078.

It seems that the price action is now stuck between $9,000 and $10,500. A break below or above one of these two levels is likely to open the door for a trip to $11,000 on the upside, or $8,000 on the downside.


 

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Hello Peter,

June 1 saw Bitcoin rally beyond $10,400 in a short breakout that may have been triggered by uncontrolled COVID-19 government spending all over the world. Blockfyre head, Simon Dedic, believes Bitcoin will leap by 1,400% and reach $150,000. According to Dedic, the development will only feature six cryptocurrencies.
This is unlike 2017’s massive rally in which most altcoins rose in value with Bitcoin’s record-high nearing $20,000. While some believe an ICO boom fuelled the surge, others attribute it to market manipulation. Placeholder founding partner Chris Burniske also hopes for more than $50,000 and $1 trillion in Bitcoin price and network value, respectively.
But not everyone believes in a bull run. In a recent tweet, analyst John Bollinger called the rally a head fake. This is when prices seem to be going in a particular direction only to take the opposite one. Bollinger also advised investors to be careful or offload their Bitcoins altogether. Bitmex boss Arthur Hayes also maintains the rally has to hit $15,000 for it to count.
 

 

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Hi Peter,

Thanks for the question. 

I think that now, the answer to your question may be yes! 

According to media reports, Paypal is working on offering crypto buying and selling services to hundreds of millions of its users.

“My understanding is that they are going to allow buys and sells of crypto directly from PayPal and Venmo. They are going to have some sort of a built-in wallet functionality so you can store it there,” an industry source was quoted by CoinDesk.

The financial behemoth is reportedly having talks with multiple crypto exchanges, such as Coinbase and Bitstamp. If everything goes according to the plan, PayPal may start offering its crypto service in the next three months. 

This could prove to be a giant step forward for the entire cryptocurrency industry. Paypal serves more than 300 million users and its direct involvement may bring cryptocurrencies one step closer to mass adoption. 

“We are a strong believer in the potential of blockchain. The digitization of currency is only a matter of when not if,” PayPal Chief Technology Officer Sri Shivananda said.

In related news, PayPal has apparently listed two job vacancies on its website, looking to hire two crypto-related persons. The firm is looking for “Technical Lead – Crypto Engineer” and “Blockchain research engineer”, which all but confirms that the financial giant is indeed preparing to roll out its crypto services.

In addition to PayPal, Venmo is apparently also preparing to offer crypto services to over 50 million of its users. Venmo is a mobile payments subsidiary of Paypal. 

All in all, Bitcoin price has reacted positively to the PayPal news by gaining over 4% in yesterday's trading session. We may finally be ready to attack and clear $10,000 and start pushing higher. The first target to the upside is $11,500. If you want to follow Mike Novogratz's advise, then Bitcoin price may travel to $20,000 by the end of the year.
 

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Hi Peter, 

Thanks for the question. 

I'm not sure about Bitcoin rally. The reasons are twofold.

First, it appears that bigger Bitcoin miners moved thousands of Bitcoins to exchange wallets, most likely to sell in the near future. This is in addition to thousands of Bitcoins transferred through over-the-counter (OTC) deals. 

Situations like this usually lead to a bear rally. Miners are looking to cash in their assets, that's why they hoard them before moving them to an exchange. Selling then, of course, impacts the prices in a bearish way. It appears that the majority of 2,650 BTC (one of the transfers) was transferred to the Bitfinex exchange.

Even bigger transfer was made earlier this week when over 9,000 BTC (approximately $86 million) was transferred. According to analysts, this is the biggest transfer in the past six months.

Secondly, we tested $10,000 - a strong resistance - and failed to clear it two times in the past two months. Technically, this is a bearish development. Following buyers' failure to clear this resistance, the price action pushed lower towards the $9,000 support. A break of this support is likely to signal a new short-term bear cycle for Bitcoin. 

I hope you can use my assessment in a positive manner. 
 

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Hi Peter,

On June 22, Bitcoin tested the $9,800 mark indicating that the bulls could make a new run and go for the $10,000 resistance area. However, just a few days later, the world’s number one cryptocurrency plunged to $8,800 which means that we still can’t expect a bullish rally for now. Right now, Bitcoin is hovering around $9,000. 

The area between $8,800 and $9,000 acts as strong support for BTC. This region has been supporting Bitcoin a few times this month, keeping it from plummeting. Still, if bulls don’t maintain the BTC price above $8,800, bears could gain control.

Dropping below $8,800 could lay the ground for a sharp decline in BTC price. One of the widely followed analysts on Twitter, Josh Rager, pointed out there’s no reason to worry if Bitcoin drops to $8,500 but in case the lower end of the trading zone in which Bitcoin has been moving since the end of May, “the trend could be predestined for the next few weeks”. 

“$BTC range is clear. Current support that has been holding the past three weeks is the mid-range. Break down here and price likely to see $8900 followed by $8500 range bottom.
Break below $8500 and IMO will make for a long summer for Bitcoin holders,” he said.

Order books at Bitfinex could indicate that BTC may be capable of preserving this key level. The cryptocurrency exchange’s order books have been reliable in predicting Bitcoin trends over the past few weeks as many of its uptrends happened after strong buying support from Bitfinex’s order books. Similarly, Bitcoin setbacks at $10,000 happened after big sell orders at the exchange. 
 

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Jumping back to this...

As I wrote in my last answer, it seems that the Bitcoin price is more inclined to the downside.

The price jumped on PayPal reports but there was no follow up on that. One of the more respected crypto analysts, Simon Peters, said that details surrounding the PayPal report are scarce. 

“The most interesting thing will be if (and how) PayPal utilises its pre-existing arrangements with various physical and online retailers. Given that a massive swathe of online retailers already have some deep integration with PayPal, will the firm begin to offer payment directly with crypto?” Peters said.
“That would be exciting indeed and would be a huge step towards seeing crypto assets, such as bitcoin and its forks, being used to pay for everyday goods and services”.

Of course, we all agree that if PayPal starts accepting crypto transfers, this would be absolutely huge for the entire industry. However, the Bitcoin bulls failed to sustain the momentum following PayPal news. This tells me that the market wants to move lower first. I agree with Peters that the move lower in Bitcoin price may be connected to the surge in new COVID-19 infections most recently. 

“After the news broke, Bitcoin hit a very respectable $9,699, dropping off towards the end of the week as markets got spooked about the spike in coronavirus cases in some parts of the world,” Peters concluded.

It would be interesting to see what happens next. Bitcoin printed a new 1-month low this week below $8,900. I think that the realistic short-term scenario is a trip to low $8,000s before new buyers get in to support the price action and launch another attempt to clear the $10,000 resistance. 

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