The Long-Awaited Signal for Bitcoin Momentum Traders Has Arrived

Bitcoin, with a value of $75,990.74, surpassed the $78,000 threshold, subsequently boosting the broader cryptocurrency market. This development occurred amidst improved risk sentiment following U.S. President Donald Trump's extension of the ceasefire with Iran, which also led to gains in stock index futures. The weeks of volatile trading between $65,000 and $75,000, characteristic of March and early April, have come to an end, providing momentum traders with the long-awaited signal to act. Momentum traders typically invest when an upward trend is confirmed, and Bitcoin's breakout serves as that confirmation, potentially drawing in more buyers and amplifying momentum. According to the principles of motion, an object in motion remains so unless acted upon by an external force, a concept that, while not originally intended for financial markets, holds relevance here. Analysts at Marex noted, 'The market had been confined within the $65 to $75 range for months. Breaking out of such a range is significant as it alters market behavior. Sellers who previously felt comfortable selling during rallies above $74 must now reassess. Momentum buyers, who were awaiting confirmation, finally have a basis to lean on.' On-chain indicators also support this outlook. For example, 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, indicating continued investor accumulation that could lead to a supply shock. Delta Exchange commented, 'Bitcoin supply on exchanges continues to decrease, with fewer coins available for sale, more BTC moving to long-term holders, and liquidity tightening. Bitcoin is becoming increasingly scarce – reduced supply translates to increased volatility.' However, QCP Capital advises caution, pointing to the persistent richness of bitcoin put options on Deribit, which are used to hedge against potential price drops. The firm also noted that crypto trends are currently linked to oil prices and interest rate expectations. 'The path forward remains tied to oil and policy. A decrease in crude oil prices or clearer signaling from the Fed would support risk. Without these factors, markets are likely to remain in a holding pattern, pricing in uncertainty rather than resolution,' QCP Capital stated. In traditional markets, WTI crude futures are trading around $90, having rebounded from a low of $78 on Friday. Meanwhile, DeFi security risks persist due to the proliferation of hacks. The Sui-based Volo protocol was recently drained of over $3 million, just days after the KelpDAO incident caused collateral damage across the sector. For more analysis on today's altcoin and derivatives activity, see Crypto Markets Today, and for a comprehensive list of this week's events, refer to CoinDesk's 'Crypto Week Ahead.' This excerpt is from the CoinDesk newsletter 'Daybook.' To stay informed, sign up here. The chart illustrates bitcoin's daily price movements, with the 100-day and 200-day average prices indicated. Bitcoin's price has firmly established itself above the 100-day average, a crucial development since this average previously capped the bounce in January, leading to sellers regaining control and a subsequent crash to nearly $60,000. Now that the price has broken through, it typically signals strengthening bullish momentum, with focus shifting to the 200-day average, currently at $85,900.