The price of bitcoin, currently at $75,939.91, has surged past $78,000, resulting in a broader upswing in the cryptocurrency market. This development comes on the heels of improved risk sentiment following the extension of the ceasefire between the U.S. and Iran by President Donald Trump, as well as gains in stock index futures.
After weeks of fluctuating between $65,000 and $75,000 in March and early April, bitcoin's ascent has finally provided momentum traders with the catalyst they were awaiting. Momentum traders typically invest when there is evidence of an upward trend. Bitcoin's recent breakout serves as a clear indication of this trend, potentially attracting more buyers and further accelerating momentum.
As stated in Newton's first law of motion, an object in motion will continue to move unless acted upon by an external force. Analysts at Marex note that the market had been confined to a range of $65 to $75 for months. The breakout from this range is significant as it alters market behavior, prompting sellers who had been resisting rallies above $74 to reassess their positions.
Meanwhile, momentum buyers now have a solid foundation to build upon. On-chain indicators also support this outlook. For instance, the number of coins held in wallets associated with centralized exchanges has dropped to a multi-year low of 2.67 million BTC, according to CryptoQuant.
This suggests continued investor accumulation, which could lead to a supply shock. The shrinking bitcoin supply on exchanges, with fewer coins available for sale and more being transferred to long-term holders, is resulting in increased scarcity and potential volatility, as noted by Delta Exchange.
However, QCP Capital advises caution, citing the persistent relative richness of bitcoin put options on Deribit, which are used to hedge against potential price drops. The firm also notes that crypto trends appear to be closely tied to oil prices and interest rate expectations. In traditional markets, WTI crude futures are trading around $90 after rebounding from a low of $78 on Friday. The broader market continues to grapple with DeFi security risks, as evidenced by the recent hack of the Sui-based Volo protocol, which resulted in the loss of over $3 million.
This incident occurred just days after the KelpDAO event, which caused collateral damage across the sector. Read more about today's activity in altcoins and derivatives in Crypto Markets Today, and stay up-to-date with this week's events in CoinDesk's Crypto Week Ahead. The chart below illustrates bitcoin's daily price movements, with the 100-day and 200-day average prices indicated by lines.
Bitcoin's price has established a firm foothold above the 100-day average, which previously capped the bounce in January and led to a deeper crash to nearly $60,000. The price has now pierced through this level, typically signaling a strengthening of bullish momentum, with the focus shifting to the 200-day average, currently positioned at $85,900.