Bitcoin crossed the $8,000 mark for the first time in 2020 in a move that coincided with a reversal from bearish trend. The recent surge in price saw Bitcoin break the combination of a strong downward trendline and horizontal resistance on different timeframes. Perhaps, the Bitcoin market has eventually turned bullish after an elongated period of trending downwards.
At this point, many Bitcoin users may be interested in knowing the factors that are behind this surge in price. This will go a long way in determining the sustainability of this new trend. Perhaps, after breaking through the resistances mentioned above, traders and investors may be considering the next appropriate move to make.
Existing Expectations for Bitcoin
In a previous article, it was noted that as price hovered around the just broken resistance, Bitcoin users mostly sat on their hands in observation. Having conquered this barrier, there is a tendency for buyers to flood into the market. However, this has to be with the conviction that the trend will continue.
There are many reasons why Bitcoin price is expected to grow, especially in the long term. For the year 2020, many users expect Bitcoin to post a full recovery after falling from an all time high price since January 2018. A number of factors were expected to initiate and sustain this anticipated recovery. However, the rains seem to have come early with the recent price surge.
As mentioned in an earlier post, the growing tension between Iran and the United States has been noted by some experts to influence the rise in the price of Bitcoin. The surge above the $7,900 resistance region saw Bitcoin reach $8,400. This coincided with the defiance of Donald Trump’s threat by Iran. The Middle Eastern nation responded to the killing of Qassem Soleimani by targeting some US military bases in Iraq.
Speculator Trading Habits
It is normal for major trends in the marketplace to be initiated by catalysts. Participants in the Bitcoin marketplace already awaited the bullish trend to set in before now. Perhaps, the timing may have been drawn closer, but the current issues could serve as a catalyst that will charge up the other areas of the industry.
While residents of the affected regions focus on finding a safe haven for their wealth and investment, others may be taking advantage of the opportunity provided. Riding the momentum is a psychological element in the world of trading. Technically, it will not be out of place to experience an influx of funds into the marketplace. Technical analysts that confirm a major breakout and possible trend reversal could take over the move. This is usually how technical factors takeover the influence of fundamentals in the art of trading.
Dealing With Trend Reversals
As mentioned in a previous post on Coinstituency, a trend reversal moment is critical for traders. It involves precise decisions in a season of uncertainties. Therefore, if you must trade around such periods, it is advisable to use tight stop losses.
When it comes to Bitcoin and cryptocurrency, things can change really quickly and in large proportions. It is therefore advisable to thread carefully and to explore all the resources that are available when studying the market. Most importantly, endeavour to ride on an already established trend, unless you’re a whale that can single handedly influence the direction of the market.
Iyke Aru is a seasoned author and educator in the blockchain and cryptocurrency industry. He has been in the business of crypto content writing for many years with thousands of his articles across several platforms on the internet. Iyke is based in Nigeria where he stands out as one of the most informed and credible figures in the cryptocurrency industry. Outside blockchain and crypto, you will most likely catch Iyke playing or discussing football with friends and family.