Bitcoin Momentum Traders Receive Long-Awaited Signal

The price of Bitcoin, currently at $78,057.01, has surpassed the $78,000 threshold, resulting in a boost to the broader cryptocurrency market. This development comes on the heels of improved risk sentiment following U.S. President Donald Trump's extension of the ceasefire with Iran, as well as gains in stock index futures. After weeks of volatile trading between $65,000 and $75,000 in March and early April, Bitcoin's upward trend has given momentum traders the catalyst they were waiting for. Momentum traders typically enter the market when there is evidence of an upward trend. Bitcoin's recent surge serves as a prime example, potentially attracting more buyers and amplifying the momentum. According to the first law of motion, an object in motion remains in motion unless acted upon by an external force. Analysts at Marex noted, 'The market spent months capped within the $65 to $75 range. Breaking out of this range is significant as it alters behavior. Sellers who previously felt comfortable selling rallies above $74 must now reassess. Momentum buyers who were waiting for confirmation finally have a foundation to build upon.' On-chain indicators also support this perspective. For instance, the number of coins held in wallets associated with centralized exchanges has dropped to a fresh multi-year low of 2.67 million BTC, according to CryptoQuant. This suggests continued investor accumulation, which could lead to a supply shock. Delta Exchange stated on X, 'Bitcoin supply on exchanges continues to shrink, with fewer coins available for sale, more BTC being transferred to long-term holders, and liquidity tightening. Bitcoin is becoming increasingly scarce – reduced supply means increased volatility.' However, QCP Capital is advising caution due to the persistent relative richness of Bitcoin put options on Deribit. Puts are utilized as a hedge against potential price drops in the underlying asset. The firm added that crypto trends currently appear to be linked to the price of oil and the interest-rate outlook. 'The path forward remains tied to oil and policy. A decrease in crude prices or clearer Fed signaling would support risk. In the absence of this, markets are likely to remain in a holding pattern, pricing uncertainty rather than resolution,' the Singapore-based firm said in a market update. In traditional markets, WTI crude futures are trading around $90, having rebounded from a low of $78 on Friday. Meanwhile, DeFi security risks persist as hacks continue to occur. Earlier today, the Sui-based Volo protocol was drained of over $3 million, just days after the KelpDAO incident that caused collateral damage across the sector. For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, see CoinDesk's 'Crypto Week Ahead.' This is an excerpt from CoinDesk's newsletter 'Daybook.' Sign up here if you haven't already. The chart illustrates Bitcoin's daily price movements in candlestick format, with lines indicating the 100-day and 200-day average prices. Bitcoin's price has established a solid foothold above the 100-day average, represented by the white line. This is crucial because the 100-day average capped the bounce in January, following which sellers regained control, leading to a deeper crash to nearly $60,000. Now that the price has pierced through, it typically signals a strengthening of bullish momentum, with the focus shifting to the 200-day average, currently positioned at $85,900.