Bitcoin surged by over 10 % ($9,500) on Wednesday, ending a four-week-long low-volatility squeeze.
Now the cryptocurrency looks set to climb towards the psychological hurdle of $10,000, as suggested through various factors.
- Volatility returns
- Bitcoin’s high of $9,551 on Wednesday was once its perfect level since June 24, according to CoinDesk’s Bitcoin Price Index.
- The gain has confirmed a Bollinger band breakout on the daily chart and opened the doors for a go of 400 dollar or more on the greater side, as mentioned by Adrian Zdunczyk, Chief executive of trading community.
- Bollinger bands are volatility indications placed 2 standard deviations above and under the 20-day transferring average.
- They had currently narrowed to stages remaining viewed in November 2018 as the cryptocurrency traded in the very restrained range of $9,000–$9,400.
- A big move regularly follows a duration of very low volatility.
- Institutional interest rising
- Open interest or open positions in bitcoin futures listed on the Chicago Mercantile Exchange (CME) – considered synonymous with institutional interest – jumped 15% to a one-month excessive of $452 million on Wednesday.
- The metric has risen by 24% over the past three days alongside bitcoin’s uptick from $9,120 to $9,550, in accordance to records source Skew.
- Global open interest (as gauged via data from 12 main crypto derivatives exchanges) has risen above $4 billion for the first time considering that early March.
- A rate rally is stated to have legs if it is accompanied by means of an uptick in open interest.
- ‘Risk-on’ markets
- The “risk-on” mood in the regular markets similarly helps improved gains for the main cryptocurrency.
- Global stock markets are trading at five-month highs while the U.S. dollar, a protected haven in times of crisis, is languishing near March lows, according to Investing.com.
- The EU’s fiscal stimulus deal and market expectations of an extra U.S. coronavirus stimulus package are pushing shares higher.
- Bitcoin has currently developed a stronger positive correlation with the equity markets.
- It’s really worth noting that escalating China-U.S. tensions pose a risk to the equity market rally and perchance bitcoin prices.