Bitcoin is experiencing yet again a single day price propelling by rising to $8,500 level. This brings us to the question if we are in a bitcoin bull trap. An analysis of the ETH/BTC indicators reveals the answer.
Bitcoin breakout: BTC price rise to $8,501
Bitcoin has risen to $8,510 level and the entire crypto market is happy with the way the prices are going up. Having not witnessed a rally of BTC price surge in the market for a quite a time, this certainly has the hope of the crypto investors and enthusiasts rising to great levels.
Some are even hoping it to be the start of the bull run. But is it really so? The biggest question is, is it the signal of a bull trap?
Currently, bitcoin is over $8,500 which is more than 25 percent of its early April lows when it was riding at $6,500 level.
Traders and investors alike are wondering if the current market rally that is hugely propelled by the strong gains on a single day is over, if at least for today.
A similar kind of trend had been seen in the bitcoin market when on April 12, when bitcoin saw a surge of $1,000 in just an hour.
Analysing the ETH/BTC indicator, BTC dominance decreasing
Here, we are going to talk about the ETH/BTC indicator that basically tracks the value of ether against bitcoin. This indicator hasn’t been on the straight for a while rather behaving sort of odd. If we take into the behavior of this indicator in the past, whenever ether rose against bitcoin, it has been a negative sign for the bitcoin. This signal means more traders are interested in exchanging their bitcoin for ether. This time, bitcoin is leading and ether is following.
At the beginning of April, BTC price was around $6,500, during which time ether regained its balance. In March, ethereum fell about 53 percent while bitcoin dropped 32 percent. So, this time, the bitcoin rally going on currently could not be a bull trap as the facts for the same doesn’t hold true this time.
According to the past records, the ETH/USD pair and bitcoin are inversely related where ETH/USD pair works as the lead indicator for the bitcoin. This inverse relationship holds true because fiat money moves into the cryptocurrency market through assets like BTC. When the bitcoin valuations look too much stretched, this money diverts into the altcoins that are relatively cheap.
The ETH/BTC leads bitcoin but this time this indicator is rising along with BTC which means they both are rising simultaneously. Not everything is different this time as fiat money is still being rotated into the not-so-known cryptocurrencies.
As per the dominance chart of CoinmarketcapCoinmarketcap, on April 2 the dominance rate of BTC has been at 45.62 percent which been fell down to 40 percent. This shows the interest of investors moving onto other cryptocurrencies than bitcoin as their dominance rate is rising sharply.
It’s all in the bullish trend of bitcoin, if this trend remains for the long term, we might see the flow back of fiat money into the bitcoin from other cryptocurrencies.
Do you think this is the start of the bitcoin bullish rally!
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I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.