Experts explain factors of the night rally

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The price of bitcoin has risen from $ 5,300 to more than $ 5,700 over several hours on May 3 in major markets, allowing the crypto market to earn more than $ 7 billion in a single day.

Most cryptography assets in the global market have increased significantly in value over the past week

Most cryptography assets in the global market have increased significantly in value over the past week

Source: coin360.io

The main cryptographic assets such as Ether (ETH), Litecoin (LTC), Bitcoin Cash (BCH) and EOS recorded gains of around 4% to 8% against the US dollar. , fueling the dynamism of the cryptography market.

The timing of bitcoin recovery is interesting

The abrupt takeover of the cryptography market, driven by the strong price increase of Bitcoin, was largely unexpected because of the controversy surrounding iFinex, the company that oversees the activities of Tether and Bitfinex.

On April 25, the New York Attorney General's Office, Letitia James, sued iFinex, alleging that Bitfinex had used $ 900 million from Tether's cash reserve to "hide" its loss of money. 850 million dollars.

The NYAG office said that Bitfinex had sent $ 850 million to a Crypto Capital Corp.-based "Panama" bank that allegedly provided banking services to various cryptographic centers that struggled to access the services of financial institutions. major financial

In the end, Bitfinex could not have recovered 850 million dollars sent to Crypto Capital Corp, which probably led the company to receive a loan of 900 million dollars from Tether.

The official document issued by the NYAG office, which pointed out that the relationship between Bitfinex and Tether was not disclosed to users and investors, was as follows:

"According to the documents filed, Bitfinex has already drawn at least $ 700 million from Tether's reserves. These transactions – which were also not disclosed to investors – treat Tether's cash reserves as a Bitfinex wealth fund and are used to mask Bitfinex's undisclosed massive losses and its inability to manage the withdrawals of its assets. customers. "

Yet, despite the worrisome development of the iFinex-Bitfinex case, the price of bitcoin went from $ 5,135 to over $ 5,735 last week at the time of the press.

What triggered the gathering of bitcoins?

In an exclusive interview with Cointelegraph, Crypto Rand, a well-known trader and technical analyst in the field of cryptocurrency, said the upward movement of Bitcoin and the rest of the market may have been merely technical.

According to the analyst, over the past two weeks, technical indicators indicated a bullish momentum for bitcoin. While the market was recovering quite quickly from the Tether scandal, it had probably boosted the confidence of existing investors in the market.

"For me, there is no fundamental reason behind it. Tether's situation caused a garbage dump that was recovered in no time. But even this cliche stopped in the support of the uptrend channel without causing major damage to the macrostructure. My point of view on this is clear. All relays on TA. He seemed rather bullish for two weeks [ago]. "

Immediately after Stuart Hoegner, Tether and Bitfinex's general counsel, was revealed in an affidavit submitted to the New York State Supreme Court, the director of Toro, Yoni Assia, hinted that this incident could serve as a catalyst for the short-term recovery of bitcoin.

"Is the news supposed to pump or empty BTC? This is bad news, but if the $ 2 billion exchange between BTC and BTC increases its price, what a situation. Tether's lawyer admits that Stablecoin now holds 74% of funds and equivalents, "said Assia.

When Tether holders started selling the Bitcoin stablecoin – anticipating that the stablecoin would lose its anchor in favor of the US dollar – the demand for this paper asset could have been motivated. Tether investors buying bitcoin to keep their funds in bitcoin or to sell at discounted prices could have fueled the dynamics of the asset.

Can Bitcoin maintain its current momentum?

Several major investors in the cryptography industry, such as Multicoin Capital's Vinny Lingham, have said that bitcoin over $ 6,200 to $ 6,400 would formally mark the start of a new bull market. Lingham said:

"The key indicator for the beginning of a sustainable uptrend is probably the decoupling of the Bitcoin asset value (ie, Bitcoin strength weakens other networks or vice versa). All the rest is only speculation (maybe we need another bubble to learn more lessons?

"That said, if we can break $ 6,200 for BTC, this will probably mark the start of another big bullish race and could explode, but if it's pure speculation and that's not the case." assets disproportionately benefit from the value created, this will probably not end. Good again!"

The valuation of the crypto market has recovered $ 185 billion, adding $ 7 billion in one night

The valuation of the crypto market has recovered $ 185 billion, adding $ 7 billion in one night

Source: coinmarketcap.com

However, some operators in the cryptocurrency sector remain cautious about the short-term trend of assets due to technical and fundamental factors.

DonAlt, a cryptocurrency analyst, for example, m said that the Bitfinex premium indicates the lack of market stability that could potentially make the asset vulnerable to a fall below $ 5,000.

Crypto Rand told Cointelegraph that bitcoin is facing strong resistance and that it may run out several months before resistance dissipates, suggesting that in the short term, this asset could have a hard time getting out of the $ 6,000 area:

"At the present time, we are probably facing the strongest horizontal resistance of any Bitcoin graph. I do not think it will be easy to cross, but I am confident about an escape in the next few months. an escape that will run another bull race. An indicator that I am closely watching the status of the market capitalization of the BTC, which currently shows a strong momentum after crossing the $ 100 billion mark or the first time in 2019. "

The pace is in full swing since December

In recent months, bitcoins have been largely dependent on momentum and technical factors to record upward movements.

The much-anticipated reduction of half of the global reward expected in May 2020 is seen as an important fundamental factor that could serve as a solid catalyst for medium-term price developments of the asset.

But most of the cumulative gain in bitcoin, from $ 3,150 to $ 5,700, probably began with a sudden rise in the price of bitcoin from $ 4,200 to $ 5,000 in the first week of the year. April, which was also caused by technical factors by a spike in the volume of the CME bitcoin futures market. Mati Greenspan, Senior Analyst at eToro, told Cointelegraph in an interview:

"The crypto market has gained a lot of momentum since the low of mid-December and it seems that many traders are becoming optimistic. The wave of April 2 has allowed us to cross important barriers and this morning we are going even further. "

In the near future, while some traders have expressed concerns about the Tether controversy, Greenspan said that if investors dumped Tether on the market, they would probably end up buying bitcoins, which would further increase the demand for assets.

"Any erosion of trust is more likely to send Bitcoin up than down. At present, about $ 2.8 billion is parked in Tether. If investors end up selling it, they will probably only buy Bitcoin. "

Over the past few days, the "true 10" volume of bitcoin, the daily legitimate daily volume of bitcoin calculated using the methodology presented by Bitwise Asset Management, has increases nearly $ 900 million, according to data provided by OnChainFX.

In March, Bitwise Asset Management calculated that the "real 10" volume, consisting of trading from at least $ 1 million in daily bitcoins, was about $ 270 million.

Compared with early March, the volume of bitcoins grew by more than 200% in less than a month.

Recovering from a panic sale in November 2018

One of the reasons bitcoins struggle to rebound above the USD 5,000 level from January to March is due to the sharp drop in the price of BTC from $ 6,300 to $ 3,820 at the end of November. last year.

In two weeks, the price of the BTC fell nearly 40% against the US dollar, pushing many individual investors to sell by panic.

"The November decline seems to be a model of capitulation where investors have sold out of apathy and despair. Once the $ 5,000 level was exceeded, we even attended a panic sale, "said Greenspan.

It took Bitcoin at least three months to cleanly break $ 4,000 and only a few minutes to go from $ 4,200 to $ 5,000.

In the coming weeks, traders will likely focus on evaluating various stimuli that could push the BTC above the crucial $ 6,000 level.

Alex Krüger, a global markets analyst, noted that the downtrend of 2018 has come to an end when bitcoin has surpassed $ 4,200 and that a new bull market is likely to start, with BTC exceeding $ 6,400 .

Increasing transaction volume, hash rate and bitcoin trading volume is a key indicator that could restore investor confidence as Bitcoin approaches its global reward.

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