Bitcoin breaking the $4000 barrier: in-depth analysis

Dollar-cost averaging
Dollar-cost averaging: passive investment strategy
March 22, 2019
Crypto price fluctuations
Crypto price fluctuations: which fear drives what?
April 6, 2019
Bitcoin breaking the $4000 barrier

This week, we have got some good news, about Bitcoin breaking the $4000 barrier. There are a lot of things which happened, which is why we should make an in-depth analysis in order to understand the present and the future.

The general confidence in the market

It is not yet that the general confidence in the market is high. It certainly is not at the same levels as in 2017, but this is one sign that it is in a recovery, and the trend is a positive one. The situation in which we are is very fragile, since one big scam might demolish this positiveness.

Things will still move slowly. A big investment in Bitcoin or an important launch in the industry might be the catalyst for fast growth. This kind of growth has to be more moderate this time, in order to avoid a bubble or a “crypto winter” like this one. It is better to take small steps, which have a certain logic and keep the investors cautious and realistic at the same time, than for a crazy growth to be installed – which leads to non-sensical optimism.

Trade volume: how Bitcoin breaking the $4000 barrier could happen

While Bitcoin was breaking the $4000 barrier, something very interesting happened: the 24h trading volume was $11 billion. We haven’t seen something so high since last April, when the cryptocurrency was trading around the price of $9000.

This is very important. Before the plunge to $3000, around November 2018, when Bitcoin was trading at $6000 and the trading volume was roughly $4 billion. The highest ever 24h trading volume of Bitcoin was almost $24 billion, on the 5th of January 2018.

Putting things into perspective, you can see the trading volume that caused the barrier breaking was unusually high. Since the trend was positive, it means that some people have started buying bigger amounts of Bitcoin.

Bitcoin dominance: down 2 points

One thing that happened as a consequence of Bitcoin breaking the $4000 barrier is that the BTC dominance is down 2 points, at 50%. Most altcoins have seen an increase between 5% and 18%. All in all, the growth resulted in $6 billion added value to the total market cap of cryptocurrencies.

It is not unusual that most altcoins have followed BTC’s trend, but some have seen a proportionally higher growth. This is not a bad thing, but at the end of the day any non-sustainable growth is only temporary. The market is eventually reaching the real level on a longer time frame.

Conclusions: the future

We are not yet sure what the future will look like. It is certain that we are in a good direction and approaching the end of this “crypto winter”. This time, hopefully growth will be even more tied to sustainability, instead of speculation. I am looking forward to some real innovation which should give a big value to the industry!

Bitcoin breaking the $4000 barrier might also mean a moment when people start shorting it. Over the last year, shorting has proven to be a profitable business, which has caused the bear market’s effects to be even bolder. If people stop shorting, we will be no longer sailing against the wind.

Anyhow, if you want to add something, feel free to leave a comment below. If you want to get in touch with me personally, use this link.


Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our email newsletter!