In last month's post, Bitcoin in the News : 2019-02 Price, I summarized the month's price chart with:- >>> 'The individual patterns are all similar: the market is in a state of equilibrium, then something happens -- always accompanied by significant volume -- to move it quickly to another state of equilibrium. The cycle repeats.' <<< Although there were elements of that pattern in March, the chart was more like a steady ascent, punctuated by dips that corrected within a few days.
You might have to look twice to see the jump at the beginning of the month, which is partially hidden by the price numbers to the left of the chart. The jump is confirmed by the volumes. After going from 4000 to 5000 (in round numbers) in a few days, the price levelled off and continued in a gentle, upward trend. Two small drops were accompanied by large increases in volume.
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Later: Let's look at the usual sources for an explanation of the big jump. In Cointelegraph's Analysis category, which has not often proved helpful, I found The Burst of the Bitcoin Bubble: An Autopsy by Marcello Minenna, one of those rare bitcoin articles strong on objectivity. The heading 'What is the floor of this incredible descent?' starts,
On the subject, we must consider that bitcoin, its clones and the rest of the digital currencies do not have their own intrinsic value. Prices are simply determined by the intersection of demand and supply on individual exchange markets; these are often highly illiquid prices, differing from each other by hundreds of euros without effective arbitrage between the various markets due to the structural limits of bitcoin and settlement platforms. Therefore, it is very difficult to think of determining what the fair value could be.
That got my attention, as did other observations. Later in the article, the author writes,
In the early months of the year, cryptocurrencies slowly regained value, but the real surprise came on April 2, when, in just one hour, bitcoin spiked by almost $1,000, surpassing $5,000 -- a new resistance that has basically held up over the weeks since.
It is not clear what the reason for this jump was (perhaps an algorithmically generated order or a liquidity squeeze connected to bitcoin derivatives followed by a forced buy-in on market makers’ quotes). After all, recently, various analysts had forecast a surge in the short term, and knowing the trigger event matters little. The real question is whether the market is heading back into bull mode. Multiple factors support an affirmative answer: [...]
In other words, the trigger doesn't matter, but all of the psychological factors in force at the time do matter. That's where technical analysis enters the picture. For this I've found Cointelegraph's Price Analysis tag to be helpful. Two articles discussed the sudden rise.
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Bitcoin, Ethereum, Ripple, Litecoin, EOS, Bitcoin Cash, Binance Coin, Stellar, Cardano, TRON: Price Analysis April 3
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'Bitcoin showed a glimpse of its former self when it skyrocketed by about 20 percent on April 2. With no specific news responsible for the rise, we can only speculate on what caused the sudden spurt in prices. Many theories have been put forth, one being a large order either by an individual trader or a group of traders that caused the price to break above the overhead resistance, following which the algorithms spotted the breakout and piled on long positions. Many traders who had been short on the digital currency were forced to cover their positions, which may have added fuel to the rally.'
- Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash, EOS, Binance Coin, Stellar, Cardano, TRON: Price Analysis April 5 • 'Google searches for Bitcoin tripled as its price skyrocketed on April 2. This shows that interest in cryptocurrencies is still high. If prices recover, a large number of traders sitting on the sidelines will jump onto the crypto bandwagon. Though the rebound is a bullish sign, for it to be sustainable, Bitcoin needs to gain a wider adoption in day to day transactions.'
We know from the April chart that the price did hold. The crypto market was in a new state of equilibrium.
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