Bitcoin may finally be back in a confirmed bull market after experiencing huge volatility as it looks to find support around $12,000.
Following a near four-fold valuation increase since its bear market lows of late 2018, the digital asset hit nearly $14,000 yesterday before the market traded down more than $2,000 to $11,800 and then $11,400 this morning.
First network effect: speculation. Human behavior very difficult to change. Bitcoin acts like both Giffin (TX fees) & Veblen (SOV) goods.
Time to buy $BTC is @TIPMayerMultple less than 0.8. Now 2.4. Only few months ago Mayer Multiple of 0.5-0.65. Easy peasy. Got #Bitcoin? 😎 pic.twitter.com/yG0sGTyssO
— Trace Mayer (@TraceMayer) June 27, 2019
After the initial sell-off, Bitcoin recovered over $1,500 to trade as high as $13,300 before falling back down for its first clear ‘lower low’ in over a week. The second push down seemed to have less momentum and the market has since bounced back above the significant level of $12,000.
Fueled by both spot and margin trading interest
The move up was driven by spectacular trading volume, with Messari recording over $5.5 billion on its ‘Real 10’ index.
Margin trading platform BitMEX also saw record highs with over $11 billion traded on its XBT/USD perpetual swap contract, which is currently holding over $1 billion in open interest and charging funding of up to 1% a day.
XBTUSD perp swap open interest is now in the 3 comma club. Welcome to the 2019 bull fucking market YeeHaw! pic.twitter.com/rLhKRIn83d
— Arthur Hayes (@CryptoHayes) June 26, 2019
Bitcoin’s market dominance is also up to 62% – a level last seen at the pinnacle of its 2017 bull run to $20,000.
After smashing through initially $10,000 and then $12,000 at the first time of asking, Bitcoin made potentially its first FOMO high of its newly established bull market since bottoming in December of last year at $3,100.
Following this latest parabolic run of nearly $5,000 (from $9,000 to $14,000), the world’s biggest digital asset has fallen back to see if new buyers can provide support to sustain a five-figure valuation.
Looking at the 12-hour chart, we can see potential short-term indecision forming a ‘Neutral-Doji‘ candle. Before the FOMO top, Bitcoin established a run of seven consecutive green 12-hourly candles, with just three red periods over an eight-day parabolic run of 55% gains.
Historically rejected twice at $12,000
Bitcoin is currently trying to establish support at a level of resistance that has rejected a Bitcoin bull market twice – in February and March of 2018.
During this time, Bitcoin made a sequence of lower highs of first $11,771 and then $11,683 a few weeks later before heading into a 10-month period of lower highs and continuous retesting of support around $6,000. The support famously broke down to confirm the bear market in November 2018.
Since then, many altcoins that are attempting to grow a community and create scarcity have seen huge increases in the worth of their tokens.
An example of this is the Binance token BNB, which has soared to all-time high prices (eclipsing even its 2017 bull run high) to trade up to its current $4.5 billion valuation.
Correlation to negative-yielding sovereign debt
Bitcoin vs global aggregate negative yielding sovereign debt. Real straightforward situation. pic.twitter.com/Obmhnkbrf7
— Travis Kling (@Travis_Kling) June 27, 2019
Just days before a showdown between China and the USA at this weekend’s G20 summit, Bitcoin is rallying in tandem with the negative-yielding sovereign debt.
Although sometimes hard to imagine (yes, someone does actually pay you to borrow money), this type of value proposition comes down to the fact that the debt is pegged to a local fiat currency that is ‘forecast’ to devalue faster than a so-called stable currency (like the US dollar) over the maturity period of the ‘sovereign note’.
Bitcoin is now under a year away from its next key technical event, which will be the first time the asset is truly watched (and checked) by all as its supply is cut in half from 12.5 to 6.25 Bitcoins every block.
Digital scarcity
The concept of digital scarcity can sometimes be hard to truly fathom. However, once understood, it could lead to the establishment of a new monetary union based on the principles of transparency and immutability in fair and free-market commerce.
Of all the globally-traded and liquid digital assets available today, only Bitcoin looks to have the credentials and track record to fulfill this infant concept.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.