Thursday’s 10% Bitcoin eruption is paramount to the bull case: here’s why 🚨 This article is 5 years old...
Thursday’s 10% Bitcoin eruption is paramount to the bull case: here’s why
3 min read
Updated: Apr. 27, 2020 at 1:57 pm UTC
Photo by Marc Szeglat on Unsplash
Catching many traders off guard, Bitcoin rallied a jaw-dropping 10 percent on Apr. 23, jumping from $7,050 to $7,800 within what was under 30 minutes’ time, boosted by a cascading liquidation of short positions on derivatives exchanges.
According to Su Zhu — the CIO of foreign exchange and crypto hedge fund Three Arrows Capital — this move is “incredibly important” for the BTC bull case moving forward.
Bitcoin rallying higher as the halving nears is critical
In approximately 17 days, estimates suggest, Bitcoin will see its next block reward reduction, better known as a “halving.” With this, the number of coins issued per block, every ten minutes, will be sliced in half from 12.5 to 6.25 coins.
It’s an event slated to be one of the most important catalysts for the cryptocurrency market. Ever.
Hence, when Bitcoin broke out yesterday, Su Zhu was excited.
The prominent crypto investor and writer explained that BTC “breaking higher from here going into the halving” — just as it started to do during yesterday’s 10 percent jump — will “capture serious mainstream attention.”
this is an incredibly important move for $BTC today and breaking higher from here going into halving will capture serious mainstream attention
— Su Zhu (@zhusu) April 23, 2020
What Zhu is saying is that should Bitcoin continue to gain bullish momentum ahead of the much-hyped halving, the crypto industry will start to garner more and more attention as mainstream media coverage picks up.
That, in turn, will create a positive feedback loop, as a noted crypto trader implied: digital asset prices rally higher, media covers the jump as a byproduct of Bitcoin’s halving, new investors flood into the industry, cryptocurrencies rally higher, and so on.
It’s a similar feedback loop that analysts say drove 2017’s $20,000 bubble.
Bitcoin’s price, after all, is partially predicated on the network effect, which states that the value of certain assets and services is predicated on how many people are using them.
The technical stars are aligning
Fortunately, analysts across the board are suggesting Bitcoin has lots of room to rally to the upside, which is likely to validate Su Zhu’s point.
A pseudonymous analyst with the moniker “Filb Filb” made this much clear when he shared the chart seen below with the attached caption:
“Imagine seeing this Bitcoin chart with less than 3 weeks to go before the halving and genuinely being bearish.”
The chart depicted at least four signs indicating that BTC is likely to do extremely well in the weeks ahead:
- The on-balance volume indicator, which tracks momentum by relating price and market volumes, has seen a breakout above a trend line, suggesting bulls are serious about this Bitcoin rally.
- BTC has recently broken above a key descending trendline that marked the $10,500 top and has held a key support zone in the mid-$6,000s.
- The market capitalization of all stablecoins has continued to surge higher, with Tether’s market capitalization alone surmounting $7 trillion. The idea with this goes that the more stablecoins there are in circulation, the more money is sitting on the sidelines ready to buy Bitcoin. This narrative has been under a bit of pressure as of late, though, as CryptoSlate reported.
- And the halving is now less than three weeks out.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.