The bullish momentum seen all week has skipped over the weekend as the majority of the top 100 tokens listed on CoinMarketCap are posting double digits.
Bitcoin (BTC) is entering a short period of consolidation and the possibility of one third round of stimulus controls for US citizens, there are two possible reasons for the current bullish price action.
Although there are concerns about the recent large influx of Bitcoin in South Korean exchanges by BTC whales, fundamental factors such as miner sentiment and the dwindling supply is leaving investors relatively optimistic about Bitcoin’s future price outlook.
A growing number of experts have voiced their view that Bitcoin’s recent bullish rise is due to gold outflows as the major cryptocurrency is rapidly becoming the preferred inflation hedge for the millennial generation.
Bitcoin finds new reach in uncharted territory
After the new high price ever in Bitcoin (BTC) of USD 41,940 on Jan. 8, the top cryptocurrency has entered what appears to be a short phase of consolidation as bulls try to push the price higher after confirming the USD 40,000 level as support.
At the time of writing, BTC is up 1.53% on the day and is trading at $ 40,690 as its 24-hour trading volume is down 26% from its all-time highs on Jan. 8.
Predicting what will come next is a difficult task at these price levels due to the lack of a price cap. Regarding price volatility, Chad Steinglass, the head of trade at CrossTower, suggested that increased volatility could be the norm until the market moves “towards a more stable environment of balanced flows and prices.”
In private commentary to Cointelegraph, Steinglass said:
“I think we are entering a stage in the markets where intraday swings of $ 1,000 will be near normal… The market maker’s liquidity relative to the size of the major player is shrinking. Now that market makers have reduced the capacity to increase warehouse risk relative to the trade flow, I expect prices to move quite quickly. “
Has a new altcoin season started?
As in previous bull markets, a rise in the price of Bitcoin is often followed by a consolidation phase. During this time, traders tend to turn their attention to altcoins and Bitcoin’s profits shift to smaller capitalization cryptocurrencies.
According to Jean Baptiste Pavageau, a partner at ExoAlpha, Bitcoin’s current bullish momentum will eventually slow and investors are likely to pile into altcoins at this point. Pavaageau told Cointelegraph:
Indeed, over the past two weeks we have begun to observe a classic distribution pattern of “wealth,” where Bitcoin investors try to take their profits and invest in other blue-chip coins. As Bitcoin’s advantage diminishes, the altcoin market is becoming more attractive to traders and investors looking for big returns. We expect Bitcoin’s dominance to begin to wane in the coming weeks and the altcoin market to boom. “
Next week packed with positive developments for stablecoin projectsMakerDAO and its MKR token, which govern the development of the DAI stablecoin, have seen a 45% increase in the last 24 hours and are currently trading at $ 1,530.
The total market cap of cryptocurrency is now at $ 1.1 trillion and Bitcoin’s dominance is 69%.