Bitcoin showed a glimpse of its former self when it skyrocketed by about 20 percent on April 2. With no specific news responsible for the rise, we can only speculate on what caused the sudden spurt in prices. Many theories have been put forth, one being a large order either by an individual trader or a group of traders that caused the price to break above the overhead resistance, following which the algorithms spotted the breakout and piled on long positions. Many traders who had been short on the digital currency were forced to cover their positions, which may have added fuel to the rally.
However, these are only assumptions. The important question to ask is whether this rally can sustain. If we only see a minor pullback across the board, it will confirm that a bottom is in place and that cryptocurrencies are about to start a new uptrend. This will force the investors sitting on the sidelines to jump in, which can push prices higher.
If the prices fail to sustain the higher levels, it will indicate that the current rally was only an aberration. There are advocates for both sides of the trade, but we believe in letting the markets do the talking. Let’s see what the charts say and devise our strategy accordingly.