The crypto market sprang back to life with bitcoin’s surge to nearly 5-month highs yesterday. But why?
To those who have been paying attention to the charts, it shouldn’t come as a surprise. The leading cryptocurrency by market value jumped nearly $1,000 to $5,080 in a 60-minute window early on Tuesday, confirming a transition from bear market to bull market that it had been signaling for some time.
In fact, after a year-long bear market, savvy traders were waiting on a trend change that would gain credence if and when prices established the most basic of all bullish technical patterns – a higher low and a higher high on its weekly charts. (A higher high would have been confirmed above $4,236.)
Looking back, a big move was overdue, as bitcoin’s average daily trading range had slipped to two-year lows in March. An extended period of low volatility often ends up with a violent move on either side.
That low volatility period ended with a strong bullish breakout, possibly due to the following three reasons:
1. Technicals were foreshadowing a bullish move
As mentioned, bitcoin’s charts have been signaling for some time that a bottom may be in the market.
This first began in late February, when we reported that bitcoin’s 50-week moving average dropped below the 100-week moving average, confirming a bearish crossover – the first since April 2015.
At the time, we wrote that the lagging indicator had turned bearish for the first time in four years, suggesting bitcoin’s price may have bottomed out after a year of declining prices.
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