3 Bullish Signs Return For Bitcoin

After testing the 6,000 mark for a couple of weeks, Bitcoin is back big time. The “people’s currency” gained close to 11% over the last seven days, heading to the $7,000 mark.

Is this comeback sustainable?

Hard to say. There are barely any “fundamentals” to determine whether Bitcoin is undervalued or overvalued at these levels.

Still, there are a couple of bullish signs for the digital currency worth noticing.

Table 1

7d Price Change For Major Cryptocurrencies

Source: Coinmarketcap.com 7/4/18 at 10:30 a.m.

[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. Disclosure: I don’t own any Bitcoin.]

One of them is that the Bitcoin rally has spread to the entire cryptocurrency chain. Only five cryptocurrencies out of the top 100 dropped in the last seven days, while 95 advanced—see table 2.

Table 2

Number of Cryptocurrencies That Advanced/Declined In The Top 100 Ranks

Source: Coinmarketcap.com 7/4/18 at 10:30 a.m.

That’s an indication that new money is flowing into the entire sector rather than to major currencies only.

And that’s the return of a bullish technical sign that fueled the big cryptocurrency rally back at the end of last year.

Another bullish sign is that Bitcoin behaves like the “new gold,” again, rallying in times of rising uncertainty on Wall Street.

Once, gold would rally as Wall Street faltered. That was long time ago, when the precious metal was the only hedge against uncertainty. It was the asset where investors could hold in times of political and economic turmoil.

Now Bitcoin is assuming this role. Bitcoin, for instance, rallied in the last five days, as conventional gold and stocks went nowhere, due to anxiety over the direction of interest rates and the prospect of a trade war between the U.S. and China. The digital currency gained 7.95% in the last five days. Meanwhile, the SPDR Gold Trust remained flat over the same period, and the S&P500 gained 0.3%.

Wednesday July 4, 2018 at 10.30pm

Bitcoin displayed a similar pattern last year. It rallied as North Korean dictator Kim Jong-un was launching missiles over Japan, and as China was trying to write its own navigation rules in South China Sea.