The bitcoin price has surged past $78,000, bolstering the broader cryptocurrency market, as risk appetite improved following the extension of the ceasefire between the U.S. and Iran by President Donald Trump. This upward move has ended the period of volatile trading between $65,000 and $75,000 seen in March and early April, providing momentum traders with the catalyst they were anticipating. Momentum traders typically enter the market when they observe evidence of an upward trend.
Bitcoin's recent breakout serves as a clear indication of this trend, 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, a principle that, although originally conceived by Sir Isaac Newton in the context of physics, can also be applied to financial markets.
Analysts at Marex noted, 'The market had been confined to a range of $65 to $75 for months. Breaking out of this range is significant as it alters market behavior. Sellers who previously felt comfortable shorting rallies above $74 now need to reassess their strategy. Momentum buyers who were waiting for confirmation now have a solid foundation to lean on.' On-chain metrics also support this outlook.
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 accumulation by investors, which could eventually lead to a supply shock.
Delta Exchange commented on X, 'Bitcoin supply on exchanges continues to decrease, with fewer coins available for sale, more BTC being transferred to long-term holders, and liquidity becoming tighter. As bitcoin becomes increasingly scarce, with supply decreasing, volatility is likely to increase.' However, QCP Capital is advising caution, pointing to the persistent relative richness of bitcoin put options on Deribit, which are used as a hedge against potential price drops. The firm also noted that crypto trends appear to be closely tied to the price of oil and the outlook for interest rates. 'The path forward remains closely linked to oil prices and policy decisions.
A decrease in crude oil prices or clearer signaling from the Fed would support risk appetite. In the absence of these factors, markets are likely to remain in a holding pattern, pricing in uncertainty rather than resolution,' the Singapore-based firm stated 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 increasing number of hacks. Earlier today, the Sui-based Volo protocol was drained of over $3 million, just days after the KelpDAO incident caused collateral damage across the sector.
For more analysis on today's activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, refer to 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 in a candlestick format, with lines representing the 100-day and 200-day average prices.
Bitcoin's price has established a solid foundation above the 100-day average, indicated by the white line. This is a pivotal development because the 100-day average previously capped the bounce in January, after which sellers regained control, leading to a deeper crash to nearly $60,000. Now that the price has broken through this level, which typically signals a strengthening of bullish momentum, the focus shifts to the 200-day average, currently positioned at $85,900.