Recent Bitcoin Rally Leads to 3 Days of Consecutive Gains
Though much of the recent news surrounding Bitcoin hasn’t been positive this fall, it looks like Bitcoin may be entering the winter strong. A recent Bitcoin rally has put the cryptocurrency up more than 20% over the past three days.
While Bitcoin was dropping over recent months, the cryptocurrency markets are offering bulls some good signs this week. Looking at trading data from the past three days, we see a significant rise from the $3,200 mark to just shy of $3,800 as traders test the $4,000 point. Let’s look at the recent price decline, up tick, and possible reasons behind the small Bitcoin rally.
Bitcoin’s Harsh November
Bitcoin’s trend from the beginning of November was an unfortunate one. Starting the month at well above $6,000 (nearing $6,600 early on), prices began plummeting shortly after. Since then, there hasn’t been much in the way of good news for traders bullish on Bitcoin. Instead, the bears stole the show with a loss of $3,192.9 over November — roughly 49.46%.
However, this week shows that attitudes are changing. If we look at the charts from the past five days, we see a different story, albeit much smaller.
Bitcoin’s 5 Day Rally
The good news for bulls, is the current bitcoin rally. Over the past 5 days, bitcoin has gained more than 20% (looking at it’s highest peak of over $4,000). At the time of writing, BTC is currently trading at $3,853. While there’s no guarantee of sustained growth through the rest of the month, the recent uptick is certainly good news for those still bullish on the cryptocurrency. But what’s causing the rise, anyway?
Cause Behind Bitcoin’s Surge
The cryptocurrency markets are difficult to analyze as it’s always hard to tell the motivation behind market movements. However, that doesn’t mean there aren’t some viable factors to consider. Mati Greenspan, senior market analyst with the social trading platform eToro told CNBC that the “impressive push from the floor” this week is the result of traders short covering.
People are looking to reduce their exposure and closing out high-risk sell positions before the holidays, and this is creating upward pressure on market prices, which is ultimately resulting in a rally.
And Greenspan isn’t just speaking abstractly either. Mark Dow, a former International Monetary Fund economist who now manages a family office in California is an outspoken critic of bitcoin’s price, especially around this time last year. Dow, who nearly perfectly called the peak of the bitcoin rally last winter, made a big move yesterday.
Dow opened a large short position against bitcoin last year, right at the height of the crypto mania. On December 20th of this year, Dow closed his short position on the high-cap cryptocurrency, according to a phone interview with Bloomberg. Dow stated:
I’m done. I don’t want to try to ride this thing to zero. I don’t want to try to squeeze more out of the lemon. I don’t want to think about it. It seemed like the right time. People buy into these assets because they believe the narrative, and you look at the asset price to see if the narrative is weakening or changing. It’s not easy — you could be wrong, but that’s the sign you look for. However, it doesn’t mean you’ll get it right.
Though there’s no reason to believe that cryptocurrencies are out of the bear market yet, there clearly is some good news for traders. With a former IMF economist and hedge fund manager who perfectly called the top of the last bitcoin rally now closing out his short position, many traders see this as possible confirmation that bitcoin either has hit the floor or will shortly. Does that mean we’re getting ready for another strong bull run?