It has been a great week for bitcoin bulls as prices surged to a new high of $363.31 just minutes ago. The total gain since our last update is now at $78 dollars or a fantastic 27% in percentage terms. Meanwhile the rest of the crypto-market is finally joining the party, with Litecoin nearing $4 dollars as I type this.
Bitcoin Surges 27 Percent
Bitcoin gained $78 dollars or 27% since last Tuesday. But the gains from the start of the rally near $250 are even larger, at $108 dollars or a massive 43.2 percent. On the chart below we can see that in the last two days the BTC/USD has gone parabolic. Yesterday we closed higher by $21 dollars and today we’re up by $33 dollars and it’s only lunchtime.
There has been a lot of speculation about the origin of this rally, with some blaming a large Ponzi scheme while others are pointing to China. Since the Yuan devaluation back in August, Chinese citizens have been withdrawing around 200 Billion USD per month from the country. Due to the presence of capital controls, many workarounds have sprung up. It’s certainly possible that bitcoin is being used as way to get capital out of the country. This would explain the large premium present on Chinese bitcoin exchanges during the past 10 days. But this is all still speculation until we get more evidence.
What’s next for bitcoin? The gains so far have been massive and they seem to go going parabolic, with $54 dollars added to the value of one coin in the past 30 hours. It’s hard to see this continuing without a sizable retracement in the next few days. This doesn’t mean that shorts are recommended because trends can often last far longer then anyone expects. A break below $300 dollars would stall the current uptrend and likely lead to a period of consolidation. But would take a move below $274 dollars to technically end the current rally.
Resistance levels higher up can be found at the $388 swing high (weak level) followed by the round $400 figure. Higher up the November 2014 high at $454 is a somewhat stronger resistance figure.
Litecoin Joins Rally
Alternative cryptocurrency Litecoin joined the BTC rally on October 29th, breaking past the important $3.19 handle. We are currently quoted at $3.92, 73 cents higher.
Litecoin is now in an uptrend as well, to end it we will need to see a break below the round $3 dollar figure. Notable resistance levels on the upside include $4 dollars, followed by $4.18 and $4.42. Note that since last Thursday the crypto has gained almost 23 percent. Similarly to bitcoin, due to the large gains, caution is advised.