Pre-Christmas Rally: Five Reasons Bitcoin (BTC) is Spiking

[Leonardo]

Bitcoin (BTC) had a spectacular start of the week - at least based on recent experience, where prices saw significant downward pressures. BTC prices quickly scaled the $3,500 level and continued to appreciate, while volumes increased to above $6.5 billion. After weeks of sell-offs, Bitcoin is seeing factors that led to the current boost and spark hopes of reaching a higher range.

Increasing dominance: Bitcoin is seen as the better bet, after the bear market hurt altcoins much more. The dominance of BTC in terms of market capitalization reached a recent high above 57%, and is now solidly above 54%. BTC prices remain relatively less volatile compared to altcoins, and the higher liquidity ensures the coin does not actually go down to zero.

Mining picking up: At least temporarily, Bitcoin mining is having a short-term reawakening. The difficulty is down 23% in the past month, meaning a higher potential for block rewards, as well as lower transaction fees. This brought many miners back, increasing the hashrate to more than 43 EH/s. The worries that Bitcoin would go into a “death spiral” of slow mining failed to materialize, and mining at these levels is still much more active than in previous years. Active mining may improve sentiment, and at least stop the continued drop in prices.

Bear market has run its course: BTC is more than 80% down from the peak, which is traditionally seen as a bottom, making traders return in expectation of a rally. The share of Coinbase trading is above 17%, based on CryptoCompare data, and USD investments remain near 20%. Paradoxically, when selling BTC, most of the funds go into Tether (USDT). But when the price rises, USDT pairs are relatively inactive. At the moment, more than 53% of BTC trades are in the BTC/USDT pair. However, during sell-offs, more than 71% of trades happen against USDT. While some are still reluctant to call a bottom, expecting more selling, BTC managed to hold above $3,000, creating expectations for at least a short year-end rally.

Stock market returns decrease: There is still no clear relationship between BTC prices and stock market performance. But for risk-takers, there may be a potential reward with the leading crypto coin, while traditional stock markets seem to be set for a decline. Additionally, fears of slowing down the US economy, combined with Fed price hikes, may create more demand for alternative investments in 2019.

Overdue for a rally: It is possible the current rally is just a pump, as traders are still cautious to cause a more extended appreciation. BTC always holds the possibility for a short-term rally, and gains of a few hundred dollars within hours may be tempting. There are no targets for the current rally, as BTC slowly regains positions, and selling may resume soon. But the week beginning on a positive note, instead of wiping out more of the price, is starting to look like a tidal shift.

Neither the author nor the publication assumes any responsibility or liability for any investments, profits, or losses made as a result of this information. Cryptocurrency trading and investing are risky propositions, and market participants are advised to always conduct thorough research.

Source: https://cryptovest.com/news/pre-christmas-rally-five-reasons-bitcoin-btc-is-spiking/