The bullish momentum seen throughout the week has extended into the weekend as the majority of the top 100 tokens listed on CoinMarketCap posted double-digit gains.
Bitcoin (BTC) is entering a brief period of consolidation and a possible third round of stimulus checks for Americans are two possible reasons for today’s bullish price action.
Despite concerns about the recent large Bitcoin inflow into South Korean exchanges by Whales BTC, fundamental factors such as miner sentiment and declining supply made investors feel relatively optimistic about Bitcoin’s future price outlook.
A growing number of experts have voiced their opinion that Bitcoin’s recent bullish spike was due to an outflow from gold as the top cryptocurrency has quickly become the preferred inflation hedge for millennials.
Bitcoin Finds New Reach in Uncharted Territory
Following a new all-time high in Bitcoin (BTC) of $41,940 on Jan 8, the top cryptocurrency has entered a brief consolidation phase as bulls seek to push the price higher after confirming the $40,000 level as support.
At the time of writing, BTC is up 1.53% on the day and trading at $40,690 as 24-hour trading volume has fallen 26% from the record high set on Jan 8.
Predicting what will happen next is a difficult task at this price level because there is no price limit. With regard to price volatility, Chad Steinglass, head of trading at CrossTower suggests that increased volatility could be commonplace until the market moves “to a more stable current environment and more stable prices.”
In a private comment Steinglass said:
“I think we are entering a stage in the market where intraday $1,000 swings will pretty much become normal… Market maker liquidity relative to the size of the big players is getting smaller and smaller. With market makers having reduced capacity to be warehouse risk relative to trade flows, I expect prices to move fairly quickly. “
Has a New Altcoin Season Started?
As was the case in previous bull markets, Bitcoin price increases are often followed by a consolidation phase. During this time, traders tend to turn their attention to altcoins and Bitcoin profits shift to smaller cryptocurrencies.
According to Jean Baptiste Pavageau, partner at ExoAlpha, the current bullish momentum seen in Bitcoin will eventually slow and investors are likely to pile on to altcoins. Pavaageau told:
“Indeed, we have started observing the classic “wealth” distribution pattern over the last 2 weeks, where Bitcoin investors are looking for profits and investing in other blue-chip coins. While Bitcoin’s upside is declining, the altcoin market is becoming more attractive to traders and investors looking for big profits. We expect to see Bitcoin’s dominance start to decline and the altcoin market expand rapidly over the next few weeks. “
The price of Ether (ETH) continued to surge to a new yearly high as the price rallied 4.2% to $1,267. Meanwhile, Bitcoin Cash (BCH) and Bitcoin SV (BSV) were up 23.6% and 61%, respectively.
Coming a week full of positive developments for the stablecoin project, MakerDAO and its MKR token, which governs the development of the DAI stablecoin, have seen a 45% increase over the past 24 hours and are currently trading at $1,530.
The overall cryptocurrency market cap now stands at $1.1 trillion and Bitcoin’s dominance rate is 69%.