Bitcoin Prices Rally Nearly 18% As 2016 Draws to a Close
Markets Weekly is a weekly column analyzing price movements in the global blockchain token markets. This edition looks at the week from 17th through 23rd December.
Bitcoin prices surged more than 17% during the week through 23rd December.
The digital currency surpassed $900 after opening the week at $780.85, CoinDesk USD Bitcoin Price Index (BPI) figures reveal. At press time, bitcoin prices had climbed as much as $918.95 during the session – a 17.7% gain since the start of the week.
Markets are currently trading at an average of $916.19.
Bitcoin experienced these gains amid several contributing factors, including strong market sentiment and significant trade volume on Chinese exchanges. In sum, the price gains signify a strong rally after markets pushed through key resistance at $800.
Aside from that, market observers have pointed to several developments – India’s push to remove certain notes from circulation and sociopolitical turmoil in Europe in particular – as potential drivers of further activity in bitcoin markets.
Market observers struck a bullish tone about the price movements taking place over the last few days.
“Sentiment is overwhelmingly bullish,” said Petar Zivkovski, COO for leveraged bitcoin trading platform Whaleclub. Whaleclub data indicates that the market was 94% long on average in the seven days through 23rd December, after being 90% long on average during the week prior.
According to Zivkovski, traders have kept these positions open for shorter periods on average. These factors indicate that traders are “after a quick profit since the trend is so bullish,” he said.
While bitcoin prices did see significant gains during the week, they lingered below $800 for the better part of the seven-day period, breaking through this key level on Tuesday, 20th December, BPI figures reveal.
Bitcoin markets did see some resistance at $800, a development noted by market analyst Jacob Eliosoff. After the price broke through this level, it rose far more quickly.
“It sure looked like steady buying took several days to grind through all the sell orders around $800, and, once it got past them, moved much more quickly through thinner offers above $800,” said Eliosoff, a cryptocurrency fund trader.
Tim Enneking, chairman of cryptocurrency hedge fund EAM, argued that bitcoin could easily push higher, saying that it has broken free of rangebound trading.
“We’ve broken out of a two-year trading range, so we’re going to move much higher, I think," he said. "We may hit my $1,200 much earlier than I thought.”
While Enneking and Zivkovski both emphasized the important role that market dynamics played in driving bitcoin prices this week, Eliosoff cited something else entirely – China.
Market observers often point to China as playing a crucial role in bitcoin’s price movements, and this week was no exception. Trading activity on the nation’s exchanges was a major driver of this week’s rally in bitcoin prices, said Eliosoff, who runs a cryptocurrency fund. He noted that these transactions could have been caused by a number of factors.
“The question is always how much of the Chinese buying is a) capital control evasion, b) just reducing [yuan] exposure, but not necessarily moving wealth outside China or c) sheer speculation/gambling," he said.
Eliosoff emphasized that while nobody knows for certain, his guess would be that the biggest causal factor driving this week’s bitcoin price gains was traders reducing their exposure to the yuan.
“The yuan has continued its slow depreciation, though not noticeably in the last 24 hours," he added.
Regardless of which factors are driving bitcoin’s price movements in the near-term, these fluctuations ultimately come down to supply and demand, Enneking noted.
“There are fewer [bitcoins] being created and interest is growing," he said. "The price can only go one way.”
This article is not intended to provide, and should not be taken as, investment advice.
Image via Shutterstock
Classic and the DAO: What Drove Ether Prices in 2016
4 Reasons 2017 Will Be Blockchain's Banner Year