On April 12, Bitcoin saw the biggest one-hour trade volume in its history, as price rallied by more than $1,000 in a period of thirty minutes. This spike in price was not preceded by any news, which points to a possible whale buying back bitcoins that they sold at higher levels or an entry of a large institutional player.
Another possible reason is that the selling pressure has eased, as most of the tax day selloffs are behind us.
The number of short positions also dropped from a high of 44,000 contracts on April 11 to 26,000 contracts on April 12. While some of the shorts would have been forced to close due to the spike in prices, others might have closed because Bitcoin had been successfully holding above the February 06 lows.
While it is difficult to pinpoint the exact reason for the increase, the move boosted sentiment across the major altcoins. As a result, the market capitalization of all cryptocurrencies again rose above the $300 billion mark, after dipping below $250 billion on April 01.
Let’s see if we can find any buy setups on the charts.
In our previous analysis, we had suggested long positions on Bitcoin once it closed above the 20-day EMA. The condition was met yesterday, as prices zoomed past the overhead resistances. So, has the cryptocurrency finally bottomed out?
The previous attempt to break out of the channel on March 03 had failed within three days. This time, things look positive because the BTC/USD pair has broken out of the descending channel with force. It should now quickly move to the 50-day SMA, which might offer some resistance.
Once above the 50-day SMA, the next move should be to $10,000. The major resistance will be $12,172.43 where profits should be booked. We don’t expect this level to be crossed in a hurry.
Traders who have initiated long positions yesterday can hold with a stop loss at $6,700. They can trail their stops higher if Bitcoin struggles to break out of the 50-day SMA.
It looks like a bottom, but the price needs to sustain at the higher levels to confirm the sentiment.