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| By Marija Matic |
Bitcoin (BTC, “A-”) broke out today, bringing its year-to-date gains to an impressive 76%, after spending the past three weeks without a clear direction.
The volatility was welcome and expected due to a few factors.
In the past few days, market makers have been closing their positions near current prices, thinning out the order books on exchanges. This dynamic suggests that they anticipated significant price swings.
Thinner books additionally contributed to an environment suitable for large price moves in either direction.
Moreover, open interest for Bitcoin options has surpassed that of Bitcoin futures for the first time in history, with a staggering $10.3 billion in open interest for options contracts, compared to $10 billion for futures. This development is particularly noteworthy, as it indicates a growing bullish sentiment.
Moving away from sentiment, there are a few fundamental reasons to be optimistic as well, if we take into consideration an on-chain metrics.
Here are four:
• We’ve seen significant accumulation, as evident by the rise in the number of new addresses — five million new addresses added BTC in the past two weeks alone!
• The number of active addresses has grown to the highest level recorded in the past two years, averaging between 600,000 and 800,000 active addresses per day in the past two months.
• The number of confirmed payments per day in April thus far have been between 700,000 and 1,000,000, which is a significant jump compared to the past 12 months when payments were averaging around 650,000 per day.
• Total hashrate is at a record all-time high, indicating bullishness among miners, whose revenues have been constantly growing since December.
Bitcoin had been trading flat since mid-March in an increasingly narrow range. That is, until today when it finally began breaking out toward the upside, as can be seen on the BTC/USDT four-hour chart:
The chart also shows a rising lower resistance (marked by the purple line), indicating a quiet bullishness that has been building for three weeks, taking the largest cryptocurrency all the way to a breaking point today.
Notable News, Notes & Tweets
• Bitcoin proponents respond to New York Times’ BTC mining report.
• AI-focused blockchain CryptoGPT raises $10 million in funding at $250 million valuation.
• What crypto investors need to know about Ethereum’s (ETH, “B”) upgrade.
What’s Next
BTC is fundamentally and technically absolutely bullish!
However, there are two significant events this week to take into consideration — the release of the March Consumer Price Index report and Ethereum’s Shanghai upgrade. Both are expected to be released on Wednesday and could influence BTC’s rally to $30,000, which represents a significant psychological level.
However, with thin order books, I anticipate that BTC can easily reach $30,000 before Wednesday.
Out of the two, the ETH upgrade will have a more significant impact on crypto and March's inflation data as a side event.
There are a few questions surrounding the Shanghai upgrade that we’ll have to wait patiently to be answered: Will reluctant ETH traders flock to BTC, pushing its price even higher? Will there be a lot of unlocked and sold ETH, or will we see even more ETH locked now that it can be withdrawn freely?
These important questions are left to be seen on Wednesday. Meanwhile, enjoy Bitcoin's strength — $30,000 will be crossed sooner rather than later!
Best,
Marija
