The leading cryptocurrency made a new local top at $10,500 yesterday but couldn’t keep up and dropped back around $10,000. The fact that it remains above $10k is a good sign and it is not “overextended chart-wise.” But economist and trader Alex Kruger notes BitMEX funding is getting on the “extreme” side yet again.
“Thinking retests of $9,500 / $9,800 would be healthy, if we get it. Some consolidation still is heavily needed. Dropdown is bad for some altcoins, but they give a dip opportunity,” trader Crypto Michaël said.
A drop could come because of the ponzi scheme PlusToken that has 50k BTC held in the wallets is back on the move, again. However, analyst Rptr45 says, “Dips continue to be an opportunity to accumulate.”
Bitcoin is already above the 200-day moving average, having tested it as a support and now keeping above it. Now, we are looking at the 50-day moving average which on crossing the 200 DMA will complete a golden cross which Mati Greenspan, founder of Quantum economic points out “is a very bullish sign.”
Futures Fueling the Bitcoin Fire
While the spot market is seeing volume above a billion dollars, the futures market is recording strong volume as well. CME Group’s bitcoin futures recorded a volume of $824 million in daily volume on Feb. 11 and an open interest of $313 million. Rival Bakkt had a record 2020 volume at $36 million and $17 million in open interest.
Bitcoin price is also trading at a premium of 6% and above $11,000.
But Why the Rally?
The crypto market is enjoying a bullish 2020 and we just two months in. The upcoming bitcoin reward halving in May 2020 which is a historically bullish event has a role to play in the ongoing rally. But apart from that, it’s the Federal Reserve pushing money into the markets that is pushing the bitcoin prices up, according to Greenspan.
Recently, on BlockTV Greenspan appeared to talk about how the market isn’t really concerned about the production gap formed because of the epidemic, deadly coronavirus in China. This is on the assumption that it can be “easily covered by the injection of free money by the world’s central banks.”
He said China’s central bank, the People’s Bank of China, has already injected a hundred and seventy billion dollars into their economy with the Fed and the European Central Bank not long behind, having resumed their quantitative easing.
“So we’re very much in an environment of money being pushed on the market, free money with low-interest rates which is why the stock market has been going completely bonkers,” said Greenspan.
The example of this is the stock market that is constantly making new highs and the recent Bitcoin-like parabolic move Tesla shares made.
“All of that free money that’s being introduced into the market, some of this is actually ending up into the crypto market,” he added. And this is what is propping the bitcoin price as well.
Analyst PlanB shares similar sentiments as he recently said, “Bitcoin keeps rising as long as FED, ECB and PBOC keep printing.”
Known for using the stock-to-flow model to determine Bitcoin value that puts its top in this bull cycle above $100k, tweeted on Wednesday, “Let’s face it: central banks have lost control with QE and negative interest rates. #bitcoin.”