Bitcoins recent rally has pushed the major cryptocurrency beyond $8,000 and helped it stay there after being as low as $5,800 less than a month ago. It is a significant move, even if it is not a large one in terms of figure, but for Jon Cotton, head strategist at BCB Group, it is truly significant.
The main reason for admiring this latest rally is that there is a belief that it could lead to a sustained upward move in the medium term, impressive in what has been mostly a bear market for the entirety of 2018.
Trading volumes are the key
Cotton has noted that there has been increased trading volumes for Bitcoin and with this, the digital currency has broken its resistance and put itself on a path towards an uptrend.
“As trading volumes increase to sizeable levels and Bitcoin breaches our previously noted resistance level of $7,740, according to our analysis the recent rally has put the currency back above an uptrend dating back to November 2017.” Cotton explained, indicating why this rally has similarities with November last year.
“Bitcoin has broken over its 50-day moving average for the first time since April and broken north of the downtrend from the December high. We think this is one of the most promising moves we have seen for the currency since the December top.“
Not out the woods yet
However, those who can remember back to that audacious rally will recall just how easily Bitcoin broke through $1,000 marks. This time, it is probably going to be different, and in fact, according to Cotton, we are not out of the woods yet.
“We're not out of the woods yet: in terms of Relative Strength Index (measuring the magnitude of recent price changes, we have moved to overbought levels, implying that a short-term ‘top’ is imminent during this rally,” Cotton added.
Alt season approaches?
Cotton also looked at the potential for the major altcoins to catch a bit of this Bitcoin break away.