Bitcoin Relief Rally Spurs Big Crypto Gains
Cryptocurrencies saw a sharp reversal in selling over the weekend with leading coins rising over double-digit percentage points.
Bitcoin, the world’s largest cryptocurrency by market capitalization, surged 20% higher while Ethereum jumped 18% and Ripple leaped 15%.
Bitcoin returned to over $21,000 this weekend, marking its highest price in 65-days and surpassing its price since before FTX declared bankruptcy late last year. Monday, Bitcoin was trading around $20,800 in the Asian afternoon while Ethereum was maintaining over $1,500. Both coins were showing signs of continued buying strength.
The weekend rally in the world’s largest coins has spurred even larger gains in metaverse-themed coins. Decentraland (MANA), a digital coin that supports a proprietary virtual reality environment, rose 75% to $0.70 while Aptos (APT), a coin that powers a software programming language for virtual reality developed by Meta engineers more than doubled to $8.51. Aptos giant gains were sparked by over $10 million in liquidations of short positions held by traders on big exchanges.
Other big gainers include decentralized blockchain networks Cardano (ADA) and Solana (SOL), which both jumped nearly 20% on Monday morning as network transactions spiked significantly higher.
The price gains in digital assets have prompted a new round of ambitious calls from leading cryptocurrency investors and have led to hefty losses for short-sellers who have seen hundreds of millions of dollars in liquidations due to margin calls.
“This year is a green year. Accumulation has begun,” wrote CryptoCon, a popular crypto analyst on Twitter. Cryptocon predicted a price rise to $34,500 in 2023.
Anthony Scaramucci, head of Skybridge Capital, a crypto hedge fund, said over the weekend that Bitcoin could hit $50,000 – $100,000 again over the coming years.
Aztec, a cryptocurrency trader who correctly predicted late last year the recent big gains in Cosmos (ATOM) and Polygon (MATIC), pointed to inflationary pressures and undervaluation among digital assets broadly as the primary reasons for the current rally.
“It was based on really a kind of relief rally,” Aztec said. “Crypto assets were oversold. Now, other countries are implementing QE [quantitative easing] … fueling the fire.”
The price action also knocked-on over to buying among non-fungible tokens (NFTs) such as digital artwork and other collectables, with exchanges Spacebudz and EpokArt seeing a rise of 200% in trading volumes.
What’s To Come?: More Messy Bulls
While many are bullish about prospects for Bitcoin, a significant number of industry players sound caution on the prospects of crypto prices in general.
Some investors foresee a risk of Binance suffering more pain after the exchange underwent over $12 billion of withdraws in the past one-month period.
Mike Alfred, a prominent value investor, is negative about Binance and maintains the exchange will likely be the subject of criminal indictments soon.
Craig Wright, the founder of Bitcoin SV and the one who many Blockchain developers maintain is the original inventor of Bitcoin, also expressed doubt that Binance would get through the recent turbulence in the industry unscathed.
“Every bucket shop is on a timer, and the end is always messy,” said Wright.
Alfred pointed to relatively thin volumes among overall in the crypto trading market as a cautionary sign for investors.
“[There’s] no volume in crypto or crypto equities right now which is why every move feels fake and brittle,” he said. “If I had to bet I would bet on some of these moves bring retraced in the coming weeks and months.”
Other investors cited similar concerns about the lack of conviction in volumes even when it comes to Bitcoin.
“Bitcoin’s price is rising for one reason: market manipulation,” said John Reed Stark, president of John Reed Stark Consulting and the former chief of internet enforcement for the Securities & Exchange Commission (SEC). Stark cited a recent analysis by Forbes that showed how 51% of Bitcoin’s daily trading volumes were likely to be fabricated trades.
“Lie down with crypto dogs, wake up with crypto fleas,” Stark said in reference to Gemini. Gemini is a crypto exchange owned by the Winklevoss twins and Digital Currency Group which is now battling an SEC lawsuit.
Still, significant numbers of traders point to Bitcoin’s price rally over the past 12 days as a sign that things are bullish over the long-term. The latest price rise represents Bitcoin’s second-longest ever winning streak.
Historical trading patterns also indicate that the world’s largest coin by market cap is on the up. Since 2011, Bitcoin has risen for 3 consecutive years followed by declines in every fourth year of trading. With a drop of 61.4% in 2022, this year may prove profitable for buyers as the coin continues in its traditional trading pattern, they maintain.
Retail investors also largely remain optimistic about the year ahead, spurred on by the beginning-of-year surge in digital coin prices.
In a poll on Twitter conducted by crypto trader Ash WSB, 69% of nearly 5,000 participants said that they think Bitcoin is headed towards $23,800 vs. $19,800 next. Alfred also cautioned against going short against Bitcoin because of the asset’s tendency to make sudden upward moves in price.
“Looks like a lot of people just got a reminder of why you should never ever, ever, short Bitcoin or top class Bitcoin related equities,” said Alfred. “Not sure how many times this needs to be said.”
Edited by Daniel Mark Harrison and Joseph Hammond