Bitcoin Breaks $60k

VYSYN Ventures Weekly Insights #46

After a brief period of consolidation, Bitcoin has resumed its upside movement and posted new all-time-high (ATH) levels. The world’s largest cryptocurrency overcame the previous $61,900 record high and marched on to new heights.

The recent Bitcoin price movement has opened the asset to significant upside potential, with price surpassing significant seller liquidity that rested around $60k. Most other cryptocurrencies are following or outperforming the leader in a market that is predominantly bullish.

In this latest VYSYN Release, we highlight the recent price behavior of Bitcoin and other altcoins. We will also identify some of the key drivers behind recent price behavior.

Bitcoin and Altcoins Simultaneously Rise

The previous ATH was a point of strong resistance for Bitcoin. Price clustered around $55k to $60k, with several failed attempts to maintain a foothold in territory above $60k.

After several attempts, Bitcoin finally claimed a firm foothold above $60k after a 6.43% daily jump on the 13th of April. This jump followed consistent trading below $60k, which would have served to diminish the seller liquidity resting at and above the level.

(Source: Tradingview.com)

With the Bitcoin now trading firmly above $60k, the role of the $60k level has reversed. What was once seller liquidity has transitioned into a level where we can anticipate buyer liquidity. This viewpoint is corroborated by a drop to $60k quickly finding support on April 15th.

Having overcome this region, several analysts anticipate that the upside movement will continue. Short-term targets of $65K and $77K have come into the picture, with a medium-term target of $100K also in view. On the 14th of April, Bitcoin traded as high as $65k on some exchanges and met resistance at this level.

The pattern of cryptocurrency rallies in 2021 appears to be a bit different from those of the previous years. Back then, Bitcoin and altcoins rallied or slumped alternatively. The suspicion at those times was that investors generally moved their funds from one side of the market to the other in an alternating pattern.

However, Bitcoin and altcoin market movements have been more closely tied in the current market cycle. The greater role of USDT in the ecosystem is a major reason underpinning this movement. In previous market cycles, BTC was the major pairing asset for altcoins. When investors allocated capital to altcoins, it typically flowed out of BTC. However, in the latest market cycle, BTC has been displaced as the major pairing asset by USDT. This means that capital can more easily flow into Bitcoin and altcoins simultaneously.

The price of both Ethereum and Ripple have both been rising alongside Bitcoin. Ethereum recently recorded a new ATH at $2,550, recording a 237% year-to-date return. While the overall bullish sentiment plays into the price rise of Ethereum, the fundamentals underpinning the network are also stronger.

Evidence shows that demand for ETH has been increasing. The proliferation of DeFi and NFT projects has played a key role in pushing up this demand. Data from the analytics platform Glassnode reveals that the amount of new addresses appearing on a weekly basis is on the rise. With the prevailing momentum, Ethereum looks set to overcome Digitalcoin’s predicted price of around $3,000 by the end of 2021 and even seek higher levels.

(Source: studio.glassnode.com)

XRP’s Ultimate Recovery

For several years, Bitcoin, Ethereum, and Ripple maintained the top-three positions of the biggest cryptocurrency networks. After a turbulent start to 2021, Ripple (XRP) has posted an unprecedented comeback and achieved its highest level since January 2018.

XRP’s travails were born out of a legal battle with the United States Security and Exchange Commission (SEC). The issue with the SEC led to the delisting of XRP by several trading platforms and a massive sell-off which saw its price crash from almost $0.8 in November 2020 to $0.25.

The price of XRP remained in doldrums until the recent surge that pushed the price back to its highest level in over 3 years. The recent high of $1.96 was last recorded in January 2018, at the beginning of the crypto winter. Despite the yet-to-be-resolved issues with the SEC, the recent surge may have rekindled the hope of XRP holders who will likely be expecting higher levels in the future.

(Source: TradingView.com)

Beyond just technical reasons, fundamental developments around most cryptocurrencies play significant roles in their price movements. For instance, the recent surge of XRP has been linked to a positive development for the XRP team in the legal battle with the SEC.

According to reports, the court denied the SEC access to financial records linked with Ripple co-founder Chris Larsen and CEO Brad Garlinghouse, who are the named defendants in the case. This piece of the news may have restored the confidence of many XRP advocates who likely engaged in the buying pressure that the cryptocurrency is currency experiencing.

Bullish Momentum to Continue?

Recent price movements have undeniably been extremely bullish. It is also worth noting that current market conditions are entirely different from the market conditions of 2017. In 2017, the market was dominantly comprised of retail investors who are subject to significant fluctuations in their outlook.

In 2021, institutions and publicly-traded investment vehicles represent a larger portion of the market. The long-term investment mandates of such entities make the market less susceptible to volatile downside movements. While it is possible for a significant portion of retail to become fearful and quickly sell simultaneously (as evidenced in March 2020), barriers exist to institutions behaving in the same way.

Institutions must issue press releases and hold shareholder meetings before carrying out drastic action like selling significant amounts of Bitcoin holdings. While further upside price movement is not guaranteed, the greater presence of institutions in the market make us optimistic that Bitcoin remains in a position where it has healthy demand-supply dynamics.

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