Bitcoin Surges 12% Over the Week to Break Above $47,500

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Bitcoin has had a great 7-day period, as it has surged over 12% and is making a bold attempt to reverse the bearish mood at the start of the year. The largest cryptocurrency by market cap has gained 5% on Monday alone, breaking above the $900 billion mark for the first time since the start of 2022 and helping the crypto market consolidate above $2 trillion.

It’s worth noting that the cryptocurrency started to show some correlation with the US stock market last year, and that seems to continue to this day. Since mid-March, the S&P 500 index, which tracks 500 of the largest publicly traded companies, has surged about 9%, getting closer to updating its year-to-date peak. When stocks find their bottom, Bitcoin is supported as well.

Nevertheless, the chances are that the cryptocurrency might break the correlation by playing the safe-haven card to extend its rally northbound, as investors are struggling with the current geopolitical tensions, high inflation, and a potential global recession.

Meanwhile, crypto investors continue to hoard Bitcoin like never before. Glassnode data shows that the percent of supply last active 1+ year ago is about to update the all-time high at over 63.3%.

Last week, Brett Munster at Blockforce Capital told Bloomberg that the indicator of dormant supply was key to understanding the current bullish mood. He commented on the indicator in a note:

Not only that, the rate at which the percent is growing is much faster than the last time we were at these levels. I expect this number to set new all-time highs in coming weeks and months because it’s exactly this cohort that stepped in and aggressively bought in April and May of last year when Bitcoin’s price fell.”

The hoarding effect is supported by major Bitcoin buyers like the Luna Foundation Guard, whose wallet address is shown to have amassed over 27,000 BTC or $1.3+ billion over the last six days. Terra, the company behind Luna, is building a $10 billion Bitcoin reserve fund for its dollar-backed stablecoin UST, which is why it has been actively buying the coin. It purchased over $100 million in BTC on Monday alone. The reserve fund is meant to secure its decentralized stablecoin.

Lucas Outumuro, head of research at IntoTheBlock, told Coindesk that there seemed to be a synergy between Bitcoin and the Terra ecosystem. He said:

UST benefits from having additional backing and bitcoin benefits not just from the buying pressure, but also from having a stable medium of exchange backed by BTC.”

Technical Analysis Supports Bullish Case

Besides the suite of fundamentals supporting Bitcoin, the price action is also pointing to the continuation of the bullish trend. To begin with, the largest cryptocurrency by market cap has just confirmed a breakout from a triangle pattern that started to form at the beginning of the year.

Symmetrical triangles usually form when bulls and bears enter the wait-and-see mode and give up leading the price action. A breakout in either direction hints at the beginning of a new trend, and in the case of Bitcoin, bulls are winning for now.

The breakout has opened the door to the next resistance near $52,000.

Abdul Gadit, CFO & Co-Founder of Zignaly, commented:

The current BTC surge is in line with the wider technical formation. As quoted before, some bullish divergence was visible on the weekly charts, and it’s playing out now. Major ALTs are yet to rally in a proper way, however, some consolidation in the BTC can lead to a wider more volatile upwards move in those major caps. For short-term traders, a dip towards 44800-45700 can be a good buying opportunity, aiming for 52000-52800.”

Meanwhile, the price of Bitcoin is about to experience a bull cross between the 50-day and 100-day simple moving averages (SMAs), the most widely used technical analysis indicators. Specifically, the 50 SMA is about to cross the 100 SMA from bottom to top, which suggest a shift in momentum and strengthens the narrative of the triangle breakout.

All of the top 100 altcoins have turned positive, with Ethereum and Polkadot adding over 13%, and Cardano and Solana surging more than 20%.

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