The cryptocurrency market ended April on a bullish note, with bitcoin surging to hit $9,500 last Thursday as coronavirus fears were overcome by excitement over the impending halving.
Since reaching such lofty heights, the leading cryptocurrency has been consolidating in a range between support at $8,600 and resistance at $9,000.
Bitcoin’s strong recovery puts it back among the best performing assets of 2020, with 20% gains year-to-date. This is surpassed by superstar Ether with 60% gains over the same period. Gold meanwhile is clocking 12% gains for the year, and the S&P 500 has fallen 12%.
This Week’s Highlights
- Bitcoin Fees Rise on High Spot Demand
- Crypto Whales Add to Holdings
Bitcoin Fees Rise on High Spot Demand
Bitcoin’s upswing appears to be driven by demand for spot bitcoin from retail traders, who may be anticipating a bull run like the halving has triggered in previous years.
U.S. exchanges have reported strong growth in spot volumes since the “Black Thursday” crash of March 12th. At the same time, Google Trends has registered record interest in the search term “bitcoin halving”.
Meanwhile, the Bitcoin network appears to be feeling the strain. Fees jumped to the highest level in ten months on April 30th, with the average transaction cost hitting $2.94 as congestion forced traders to pay more to avoid delays.
Crypto Whales Add to Holdings
The number of unique addresses holding more than 10,000 bitcoin has risen significantly, according to data from Glassnode. This suggests investors with deep pockets — known as “whales” in crypto parlance — may have been accumulating bitcoin in expectation of a move higher.
But while the bullish narrative might be stronger than ever, the data doesn’t necessarily point to the activity of whales, with several addresses containing large amounts thought to be owned by exchanges.
The Week Ahead
As the world comes to terms with coronavirus, global markets are now being skewed by the threat of a fresh trade war, with Trump suggesting tariffs in retaliation against China’s handling of the pandemic.
This, alongside ongoing tensions with Iran, threaten to introduce more geopolitical uncertainty to the cryptocurrency market — potentially reigniting bitcoin’s safe haven appeal and putting an end to the recent correlation with stocks. The previous trade war saw bitcoin rise together with gold as traders bought up the assets at pivotal moments.
More immediately, the prospect of the halving is likely to remain top of mind over the coming week, with traders now wondering if the recent bull run is a sign of things to come, or if the halving itself will be a “buy the rumor, sell the news” situation.