Return of the prospectors
Views expressed in the article below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
After a week of consolidation in the mid-$40k region, Bitcoin announced bullish intent with a rapid climb to flip $47k resistance. The run kicked off in typically dramatic fashion, following falsified news announcing that Walmart would be adopting Litecoin (LTC) for payments circulated on Tuesday. In the hour that followed, BTC climbed nearly $3k from $44k, before immediately retracing to $43k after the announcement was retracted. The whiplash in price action, while jarring, indicated that sentiment is both hungry and positive – with investors itching for bullish news. Subsequent days have thus far validated this narrative, as BTC printed an almost 5% gain on Wednesday, soaring above $47k, before continuing a rise to the $48k-region.
Tradingview.com
Technicals
From the perspective of technical analysis, this week’s uptrend was likely spurred by the crossing of two simple, yet highly popular indicators – The 50- and 200-day Moving Average (MA). Each line represents average price movement over the specified periods. In an uptrend, shorter time frames should be running higher than longer ones. In late June, we saw the 50MA cross below the 200MA, a movement termed the “death cross”, which preceded a drop from $40k to $28k lows. On Wednesday, however, we saw the converse, as the 50MA crossed above once again, forming the so-called golden cross. For context, the last time BTC saw a golden cross was May 2020, when BTC was sitting at just $8k.
50MA (orange) crossing 200MA (green)
An examination of the 200 Week MA paints an even more bullish thesis, indicating that the current bull cycle hasn’t yet reached the relative increases seen in previous cycles.
Lookintobitcoin.com
In it for the tech
Interestingly, it hasn’t been a particularly good week for technology in the space. Solana’s rampant run hit a brick wall on Tuesday as the network suffered over 16 hours of downtime, following resource exhaustion. The high-throughput network was reportedly overwhelmed by a surge in activity, with outages beginning as traffic exploded to a high of 400k transactions per second (TPS) – an incredible feat in and of itself.
Outages such as Solana’s are inevitable in an industry that is essentially an exercise in “testing in prod” as builders continue to refine and improve network technologies in this emerging realm. Think back to dial-up internet – we didn’t simply just arrive at high-speed fibre. The internet we know today is the culmination of decades of experimentation and trial-and-error from millions of contributors working tirelessly to deliver instantly accessible and always-on Web 2.0.
Standing before us is the next iteration of that herculean endeavour, this time involving a transformation of value – a far more disruptive undertaking. The fact that the blockchain space, barely a decade old, has already begun its disruption in tectonic shifts, underlines both how early we are in the space’s trajectory, and the seemingly infinite scope of its potential.
As we enter the business end of September, BTC may likely continue its steady grind upward, interspersed with chops and swings as anticipation of Q4 grows. If prevailing models, analysts, and sentiment hold true, we could be standing on the precipice of an exponential run towards a blow-off top, which many place above the hallowed $100k mark.