MONSTER WEEKEND: Bitcoin bull run or false dawn?

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MONSTER WEEKEND: Bitcoin bull run or false dawn?

After a monster weekend in which BTC hit a new high for 2019 the big question is whether this is a new Bitcoin bull run or just a false dawn?

The price spiked around 20 percent to hit a brief high above A$10,800 on Sunday evening but has now pulled back to around A$10,000 – still an impressive increase from the $8200 it was trading at mid-week.

But plenty of people are questioning the timing of the rally – hot on the heels of Binance experiencing the sixth largest hack in history, and Bitfinex and Tether at the centre of $1.2 billion of alleged fraud.

Bull run FOMO not seen since 2017

Still, the price spike has cause levels of FOMO for a potential Bitcoin bull run not seen since late 2017 and the fundamentals are looking strong. Bitcoin’s dominance has risen 58.87% – levels last seen in 2017 – and on Friday the trading volume on the institutionally favored Grayscale Bitcoin Trust hit $50 million. Over the weekend the daily volume of Bitcoin on BitMEX hit more than US$10 billion.

Binance and Coinbase were already getting around 1 million unique visitors a day, which increased 13 and 17 percent respectively in April according to data from SimilarWeb.

Bloomberg also reported last week that financial services giant Fidelity Investments will be launching crypto trading focused on institutional customers  “within a few weeks”. And there are rumours that eBay is about to start accepting crypto.

A raft of analysts are calling it the start of a new Bitcoin bull run due to BTC’s ‘parabolic’ advance, which veteran analyst Peter Brandt said late last week would lead to a new all-time high of $50,000.

Crypto analyst The Wolf Of All Streets called the spike: “One of the most powerfully bullish moves that bitcoin has ever made.”

Setbacks on the way for Bitcoin bull run

NewsBTC reported that if history mirrored the way BTC emerged from the 2015 bearmarket, the price could now fall by 20% to 25%, before entering the second phase of accumulation.

Independent Reserve says price spike continues the trend

Adrian Przelozny, the CEO of Australian cryptocurrency exchange, Independent Reserve, pointed out the spike was the continuation of the upward trend across the year.

“After successive months of strong gains from crypto, all signs suggest the markets have finally emerged from the crypto winter,” he said.

“The king of crypto has staged a remarkable 82% recovery so far this year. The market cap is now above US$130 billion, and the last time the market cap was this large, BTC topped $20,000 in the space of a few weeks.”

He pointed to “increased interest” from the “institutional sector” as a major factor and added, “We see this trend continuing into the future and expect this to be reflected in the price as investor sentiment continues to improve.”

Critical voices for Bitcoin bull run timing

However, there are also a few critical voices who aren’t willing to embrace euphoria just yet. They point out the price spike began pretty much the same day that Binance experienced the sixth largest cryptocurrency hack in history, losing 7000 BTC or around $57.4 million worth. Deposits and withdrawals were suspended on the platform.

A major negative news story like that is often associated with a market decline.

And the Binance hack came two weeks after news emerged the New York Attorney General’s office had alleged that Bitfinex and Tether “may have defrauded” investors by taking money from Tether’s cash reserves to hide the “apparent loss” of $1.2 billion (US$850 million).

It’s also emerged that Tether’s US dollar reserves only account for 74% of the actual USDT in the world.

However, the news Bitfinex is in the process of raising $1.4 billion in an IEO to plug the hole in its finances, may have reassured the market.

Calvin Ayre raises doubts

Controversial Bitcoin SV backer Calvin Ayre asked: “Is the current BTC price move an exit pump by all the exchange scammers…” He got a pretty frosty reception as usual.

On Reddit, plenty of theories were raised for the price spike: from Binance buying up 7000 BTC to make up for the hacked funds, to Tether being used to manipulate markets. Tether has been accused of doing so before, including in a well-researched 2018 report by University of Texas professors John Griffin and Amin Shams.

“I like the price is going up but man, something feels off about this,” said Redditor Warmwires.

“Tether and Bitfinex lose a bunch of money and then all of a sudden we pump and everyone forgets,” said Chelseaqix.

“I’m glad there is some people with some sense. There is far too much fishy stuff going on and I feel some people are going to lose a lot of money,” said H1z1yoyo.

But for every doubter, there were five celebrating the imminent start of the bull run. Time will tell who is right.