The price of bitcoin, currently at $75,744.65, surged past $78,000, boosting the overall cryptocurrency market. This upward movement occurred as market sentiment improved following U.S.
President Donald Trump's decision to extend the ceasefire with Iran, also leading to gains in stock index futures. The weeks of volatile trading between $65,000 and $75,000, characteristic of March and early April, have ended, providing momentum traders with the confirmation they had been anticipating. Momentum traders typically invest when an upward trend is confirmed, and bitcoin's recent breakout may attract more buyers, further amplifying the momentum.
According to the first law of motion, an object in motion remains in motion unless acted upon by an external force, a principle that, although not originally intended for financial markets, holds relevance. Analysts at Marex noted, 'The market had been confined to a range between 65 and 75 for months. Breaking out of this range is significant as it alters behavior.
Sellers who previously felt comfortable selling during rallies above 74 now need to reassess. Momentum buyers who were waiting for confirmation now have a basis for their investments.' On-chain indicators also support this view. For instance, data from CryptoQuant shows that the number of coins held in wallets associated with centralized exchanges has dropped to a multi-year low of 2.67 million BTC, indicating continued investor accumulation, which could potentially lead to a supply shock. 'The supply of bitcoin on exchanges continues to decrease, with fewer coins available for sale, more BTC being transferred to long-term holders, and liquidity becoming more constrained.
Bitcoin is becoming increasingly scarce, and as supply decreases, volatility is likely to increase,' Delta Exchange stated. However, QCP Capital is advising caution, highlighting the persistent relative richness of bitcoin put options on Deribit, which are used as a hedge against potential price drops. The firm noted that current crypto trends seem to be influenced by oil prices and the interest-rate outlook.
'The path forward remains tied to oil and policy. A decrease in crude oil prices or clearer signaling from the Fed would support risk-taking.
Without these factors, markets are likely to remain in a holding pattern, pricing in 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, security risks in DeFi continue to be a concern due to the proliferation of hacks.
Early today, the Sui-based Volo protocol was drained of over $3 million, just days after the KelpDAO incident caused damage across the sector. Read more about today's activity in altcoins and derivatives in Crypto Markets Today, and find a comprehensive list of this week's events in CoinDesk's Crypto Week Ahead.
This excerpt is from the CoinDesk newsletter 'Daybook.' To stay updated, sign up here if you haven't already. The chart illustrates bitcoin's daily price movements, with lines representing the 100-day and 200-day average prices. Bitcoin's price has established a strong foothold above the 100-day average, a pivotal development as the 100-day average previously capped the bounce in January, leading to a deeper crash to nearly $60,000.
Now that the price has broken through this level, typically signaling strengthened bullish momentum, focus shifts to the 200-day average, currently at $85,900.