To start off the second day of the workweek, the bulls decided to crash the party as Bitcoin’s price broke the previous ATH of US$4,460 and peaked at US$4,649 on Bitstamp.
Since the beginning of the year, Bitcoin’s price has increased more than 5 times its value. While a future price rise isn’t guaranteed, it is highly anticipated. The move to the $4,600 level signals that the market is looking for new support. The $4,500 level has been a war zone for the past couple of days, but it has been acting as support during the recent price spike.
North Korea-Japan Conflict Fueling Bitcoin Demand
In previous coverage, The Merkle extensively explained the increase in demand for Bitcoin from retail, professional and institutional investors as a safe haven asset and a robust store of value. In times of economic uncertainty and global market instability, investors in the traditional finance sector have migrated to Bitcoin and the wider cryptocurrency market to avoid losses.
Two days ago prior to the price spike, prominent financial analyst and the host of RT’s Keiser Report Max Keiser stated that the demand for bitcoin will likely rise in the upcoming days due to the rising tension between North Korea and Japan.
“Bitcoin moving higher attracting safe haven money on news of North Korea’s missile launch over Japan,” said Keiser.
Additionally, an increasing number of mainstream media networks in the US, South Korea, Japan and China, four of the world’s largest Bitcoin and cryptocurrency markets, have started to extensively report on Bitcoin and its price trend once again, fueling more upward momentum and another strong rally.
“Bitcoin will probably break $5,000 this week, starting a new media blitz, creating new wave of buyers who will power price toward $10,000,” Keiser added.
Analysts including Keiser predict a new wave of buyers and investors will enter the cryptocurrency market and invest in Bitcoin amidst serious global financial instability.
Scaling and Lower Transaction Fees
Even after the completion of the Segregated Witness (SegWit) update, the transaction malleability and scaling solution proposed by the Bitcoin Core development team, many of Bitcoin’s users and investors have expressed concern in regards to Bitcoin’s rising transaction fees.
Although developers such as Jeff Garzik have criticized the high fees of the Bitcoin network, it is important to understand that in order for SegWit to decrease transaction fees, users must first deal with SegWit-enabled transactions.
The first major step towards decreasing transaction fees with SegWit is the adoption and integration of the solution by wallet platforms. Already, Trezor and Ledger, two of the most widely utilized Bitcoin hardware wallets in the market, have integrated SegWit. In a recent statement, the Ledger development team stated that users utilizing its SegWit wallet will enjoy an immediate 35 percent reduction in transaction fees.
“Segwit introduces the concept of block weight which changes the way the transaction size is computed by splitting the signatures in a different area — you can typically save 35% of the fee paid when sending a transaction immediately,” said Ledger.
With fees and Bitcoin block optimization in sight due to the integration of SegWit by leading Bitcoin wallets, combined with increasing positive media coverage on Bitcoin’s recent rally, it is likely that Bitcoin’s price can achieve a new milestone by surpassing the US$5,000 mark, as predicted by Keiser.
The current daily RSI is at 74, and it just now passed the stable threshold and is hinting at an overbought market. Taking a look at this chart from bitcoincharts we can see that the last time the RSI hovered in the dangerous territory above the 70 level, the price pulled back.
It may be a good idea to keep an eye on the RSI; if it stays above 70, the market is at risk of a correction.