Bitcoin: a rebound that shakes the sector

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04/26/2019 | 05:13 pm
Bitcoin made the headlines for surging from $1,000 to nearly $20,000 in 2017, and then suffering a violent correction, bringing its price below $4,000 in 2018. Since then, it was calm and the currency stagnated at these levels. But on April 2, the famous crypto received renewed interest. By taking 20% in a few hours, it came back to familiarize herself with the $5,000. An upward trend that continues.
Several hypotheses have circulated to explain this increase:

A) Several reports state that a major investor has placed a purchase order for $100 million spread over 3 different trading platforms: Coinbase, Kraken and Bitstamp. Indeed, although the market capitalization of Bitcoin today stands at about $97 billion (representing more than 54% of the capitalization of all virtual currencies), there are major investors, called "Bitcoins whales", who hold astronomical quantities of bitcoins and who are able to shift prices by placing orders.

B) A significant movement has taken place on the futures side. Traders holding short positions could be at the origin of this increase, according to Bloomberg. Commodity and Futures Trading recorded a sharp drop in short positions and a sharp increase in purchases on the CME on that day.

C) Bloomberg suggested an "April Fool's Day" on cryptocurrencies information sites, according to which the SEC would have approved Bitcoin ETFs.

D) This ascent was purely technical. Investor have followed the trend once the resistance of the $4,200 crossed the upside.

To be perfectly honest, many other explanations have circulated, especially those that traditionally return to the stock market when it comes to finding the reason for a violent movement without foundation: the good old "fat finger", or the algorithm that goes crazy.

And three weeks later, no one is able to give with certainty the reasons for the Bitcoin's awakening. One thing is certain, the movement continues to this day: the crypto has hung the $5,500.
Source : MarketScreener

Technically, in weekly data, the prices gradually return to test the relevant area of $6,000. This return in Pullback form will be particularly followed by operators. Its crossing would pave the way for a new target close to $8,200. On the other hand, a blockage in contact with this resistance ($6,000) would restore power to the selling current, which has been dormant since the end of 2018.

The rise of the Bitcoin above $5,000 has put cryptocurrencies back in the spotlight, as shown by a recent increase in news:

- The Chicago Mercantile Exchange revealed in a press release that futures trading volumes on the platform would have reached a record level of 22,542 contracts on April 4, representing approximately $546 million, the majority of which were from Asia. 
Source : CME Group

- China is considering banning the mining* of Bitcoin and other cryptocurrencies because of the energy consumption and pollution it causes. China's National Development and Reform Commission (NDRC) launched a survey on Monday to obtain public opinion on the subject. The public consultation is open until May 7.

- Facebook has announced the launch of its own electronic currency: Facebook Coin. This electronic currency would be used by users of Marketplace, created by Facebook several years ago. According to Ross Sandler, an analyst at Barclays, this cryptocurrency could represent an additional $19 billion in sales for FB by 2021.

- Tunisia is studying the possibility of launching its own cryptocurrency.  Walid Driss, the founder of the start-up DigitUS Tech, revealed in an interview with AsiaTimes that he was working with the Central Bank of Tunisia to launch a "digital dinar". It should be noted that the Director of the International Monetary Fund, Christine Lagarde, told the Fintechs festival in Singapore last November that other countries such as Canada, Sweden, Uruguay and China were also studying the idea of creating their own virtual currency.

- Japanese e-commerce giant Rakuten (the Japanese Amazon) mentioned, in its annual report, its intention to modify its online payment application, by integrating a cryptocurrency exchange platform.

*Mining happens when an individual makes his computer available to the net work and contributes to the maintenance of the network. Thanks to the common computing power, before a transaction is made, verifications concerning the history of past transactions, the veracity of information, etc. are made, and if all is well, the operation is carried out and the virtual currency is exchanged. Thus, individuals are considered as miners and are paid in this currency.
Anas Lozach 2019
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