Bitcoin is keeping the market guessing this Monday—$12,000 came and went in sudden spurts of volatility which show no signs of stopping.
According to data from price trackers including CoinMarketCap, Bitcoin showed signs of breakout through the weekend, this finally coming true in the early hours of Monday as BTC/USD hit highs of $12,070.
The highs were short lived. Hours later, a sudden plunge took the pair to $11,500, bouncing off support to linger in the middle of its daily corridor.
Bitcoin cements its highest weekly close in over 2 years
This second trip to $12,000 mirrors the first which occurred at the start of August—a fleeting retake of the new level before heavy resistance reverses the uptrend.
Nonetheless, this event differentiates itself from the rest in one aspect which may be crucial—its impact on Bitcoin’s weekly close.
Coming when it did, the $12,000 cycle allowed BTC/USD to set its highest weekly close since early January 2018.
For popular analyst Josh Rager, this has important implications for overall Bitcoin uptake among a new class of potentially influential large-volume investors.
“Any time a major market structure like this is broken — it’s definitely a buy signal for bigger players to jump into the market,” he told subscribers of his Telegram trading channel.
“Many people wait on confirmation from high time frames before jumping in and this was a big deal. Dips and pullbacks can be expected but overall—I expect price to continue to move up this week.”
Bitcoin has delivered impressive gains since its March crash in line with other macro assets, but these typically came in the form of short bursts of volatility within a general trend.
The past weeks have nonetheless seen BTC/USD upend its previous pattern of compression and “ranging” behavior that previously characterized it.
Macro weakness favors safe haven strength
While Rager did not give a target for continued bullish momentum to hit, his optimism reflects broader consensus that Bitcoin’s 2020 breakout has little in common with any since its run to $20,000 in 2017.
One major reason lies in macro factors—unlike before, a weak dollar, fiat economy weakness, and a rush into safe havens makes 2020 unlike any other year in Bitcoin’s history. As various commentators have noted, this year is the first in which Bitcoin is facing a global financial crisis similar to that which gave birth to it.
The theme continues this month—Turkey is suffering a currency crisis which has sent the lira to record lows against various major fiat currencies, as well as Bitcoin. The knock-on effect is now expected to hit other developing economies, analysts warn this week.
“Amid August illiquidity, a discontinuous move in the lira would still reverberate across EM HY [emerging markets high yield bond] markets as investors would likely worry about ‘the next domino to fall’ as a result of the COVID crisis,” Goldman Sachs analysts said in a report quoted by Bloomberg.
As gold lingers near record highs against the dollar and even oil begins to gain, attention begins to turn to how Bitcoin will react—and whether correlation to the precious metal or stocks, as before, will continue.
Bitcoin CME gap gets filled within hours
Within Bitcoin, however, another phenomenon is already showing its prowess once again. Monday’s dip to $11,500 allowed BTC/USD to neatly cover the latest “gap” in CME Bitcoin futures markets.
At around $11,700, the gap formed the exact middle of the corridor formed by the sudden volatility.
“CME… to the penny,” the popular Twitter account known as Parabolic Trav summarized.
CME’s futures have become known for providing short-term BTC price targets. When the end of one week’s trading differs in price to the start of the next, Bitcoin tends to either rise or fall from spot to “fill” the resulting gap.
This typically occurs within days or even hours, and this week is now no exception to the rule.
One larger gap remains — and it’s much lower, at just under $10,000. Such a fall is, however, unlikely, Michaël van de Poppe of the Amsterdam Stock Exchange believes.
In fresh analysis on Monday, van de Poppe argued that strong buy support at $10,200 would save Bitcoin from losing five figures again.
Conversely, a rebound back above $12,000 would open the door to $13,000 — and once that hits, Parabolic Trav believes that the situation will change fundamentally.
As of press time, the rebound is well underway, $11,940 forming the top as bulls remain firmly in control.