- Bitcoin has pushed past the $30,000 price point.
- Analysts believe that spot market activity is driving Bitcoin’s rally.
- Traders appear optimistic, but the price may face some short-term resistance.
Following a devastating 2022 that wiped out nearly $2 trillion from the total crypto market cap, the markets have shown significant strength this year. The Q1 rally looks set to continue as Bitcoin, the #1 crypto asset by market cap, has finally toppled the price resistance at $30k.
Bitcoin Takes Out Millions in Shorts
In the last 24 hours, Bitcoin’s price has surged by over 6% from around $28,400 to above $30k for the first time since June 2022, forming a new ten-month high. The price jump came as the asset broke out of an ascending triangle chart pattern to the upside. While a breakout could have occurred in either direction, the pattern typically resolves to the upside as a bullish continuation pattern.
The latest price run has left short traders in the red, as Coinglass data estimates that $69.28 million shorts were liquidated, while Bitcoin bulls are over $11 million in profit.
What’s Driving Bitcoin’s Rally?
As highlighted on Twitter by “Checkmate,” a lead on-chain Glassnode analyst, Q1 2023 represented Bitcoin’s best quarterly and monthly performance since November 2021, when it attained its all-time high of $69k.
In a Twitter thread on April 10, the analyst argued that spot market activity, not leverage trading, has driven Bitcoin’s bullish price run. Citing Glassnode data, Checkmate noted healthy growth in on-chain metrics such as the number of Bitcoin addresses, transfer volumes, mining revenue, crypto exchange activity, and stablecoin outflows.
Comparatively, open interest has reached yearly lows, while funding rates, which indicate the difference between the price of a futures contract and the “mark price,” are barely positive.
Analysis from experts is positive, as spot market-driven rallies are often more sustainable than those driven by leverage trading, which can often lead to short squeezes and bull traps. Notably, Reflexivity Research co-founder Will Clemente came to a similar conclusion regarding the driving force behind Bitcoin’s price movement in March.
Bitcoin is decoupling from the equities market and showing a more significant correlation with gold, the traditional safe-haven asset in times of uncertainty, as highlighted by Kaiko, a crypto research platform.
The quarter represents a significant shift from last year, when the asset moved in tandem with risk markets, which plunged as the Fed raised interest rates. The change in the wake of bank failures indicates that investors are now fleeing to Bitcoin for refuge, leading to the increased spot market demand and price rally.
After $30k, What’s Next?
According to Ali Martinez, a prominent price action trader, the asset should run up to the $34k price point, judging by the “bullish megaphone pattern” formed on the daily chart.
On the other hand, “Profit Blue,” another highly followed analyst, claims that the asset may face resistance within the $31k to $32k price range on its journey to new highs.
On the Flipside
- This week, important economic data like the U.S. Consumer Price Index (CPI), the Federal Open Market Committee (FOMC) meeting minutes, and the Producer Price Index (PPI) are expected and have historically caused significant volatility in the crypto market.
- Bloomberg Intelligence analysts believe reducing U.S. dollar liquidity could stop Bitcoin’s run.
Why You Should Care
Bitcoin’s price movements often dictate the overall direction of other cryptocurrencies. Consequently, the asset’s latest rally to $30k is expected to spark a broader crypto surge. Still, traders should also exercise caution as price corrections tend to follow impulsive price action.
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