Bitcoin has finally lifted itself out of the most stagnant periods of price action in more than 18 months with a triumphant rally above the psychological level at $10,000.
The world’s largest cryptocurrency has seen its market cap increase by $20 billion to $188 billion over the past week as the tide begins to turn towards a cryptocurrency bull market.
At the time of writing Bitcoin is trading just above $10,500 as it takes aim at the bitter $10,500 level of resistance.
It’s worth noting that $10,500 has been a point of rejection on three occasions in October, February and more recently in May, with Bitcoin failing to trade above that level since early September 2019.
As a result, it adds importance to a potential break out as it would indicate a clear shift in behaviour and sentiment surrounding the cryptocurrency market.
There is a number of theories as to why Bitcoin has woken up in the past week, with some suggesting that it is simply the delayed impact of May’s halving event, while others claim that it is caused by the rise in popularity of DeFi projects.
Projects like Yearn Finance and Compound have multiplied in value exponentially as a new wave of investors flock to the idea of decentralised finance.
When traders and investors take profits, capital will naturally flow back into Bitcoin and Ethereum instead of into fiat currencies, which could well be the reason behind the recent rally.
However, as reported by Coin Rivet in March, the halving typically has a delayed effect on the market, with a rally not being expected until later this year.
The stock-to-flow model indicates that as supply over time is reduced alongside a steady stream of demand, the price will naturally rise to a point that will grab the attention of another wave of investors, very similar to how people flocked to Bitcoin during its top in December 2017.
In the short term if Bitcoin can break above $10,500 for the first time in nine months it would indicate an initial drive towards $10,950, while another rejection could see the CME futures gap get filled at $9,400.
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