Lately, Bitcoin seems to be the gift that keeps on giving. After breaking new all time highs yesterday at $1642, the market climbed another $200 peaking at $1760. Earlier we discussed how Fibonacci retracements put the next resistance at right around $1700, it seems that the market is potentially turning that zone into support after testing it a few hours earlier.
It looks like Japan is taking the lead during this rally as Bitcoin has been trading at a premium there. The introduction of legislature to legalize cryptocurrency, and the overall positive outlook in the country has influenced some of Japan’s multi billion dollar financial conglomerates to take a closer look at the crypto markets.
Furthermore, the recent price rise may even allow MtGox to get out of insolvency and possibly reimburse all the victims of the supposed “hack.” According to Mark Karpeles, taking into account the current price rise, MtGox’s 200,000+ coins are put the value of the estate at roughly 60% of the outstanding claim. As per our calculations, if Bitcoin’s price tops at $2900 the now defunct exchange would be able to fully return the owed balance to all creditors.
What makes this rally different is money is not only flowing into Bitcoin, but it is also flowing into alternative cryptocurrencies as well. In fact, the total marketcap for altcoins is right about $50 billion, of which Bitcoin accounts for 50% at roughly $27 billion.
Such a massive rally needs to be supported with an equally large amount of volume in order to sustain itself. The markets speak for themselves as Bitcoin’s past 24 hour trading volume has reached over $1.4 billion. In fact, the past week over $6 billion in Bitcoin have exchanges hands, and over $13 billion in the past month.
Another emerging reason for Bitcoin’s rally is the possible upcoming consensus on the scaling debate. Bitcoin Core and Bitcoin Unlimited have been on the opposing side of the debate each having a different vision to the solution for the full blocks. Last month, as the debate intensified and each side showed their arsenal, Bitcoin price was unstable as traders feared a hard fork. However, it seems that with the activation of SegWit on the Litecoin network showing no signs of any issues, Bitcoin may soon follow suit.
Taking a look at this chart, we can see that after peaking at 50% on April 21st, the percentage of blocks signalling Bitcoin unlimited has seemingly stopped growing and has been bouncing between 30 and 40 percent the past month. If Bitcoin activates SegWit on the network, not only will blocks will be able to contain more transactions, but the price might continue its astronomical rise.
After all, the scaling debate is what has been holding back the cryptocurrency over the past few months. As fears of a hard fork have significantly diminished, it is evident the Bitcoin market caught its lucky break.
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