To start off the second day of the week, the bulls decided to crash the party as Bitcoin’s price broke the previous ATH of $4460 and peaked at $4649 on Bitstamp.
Since the beginning of the year, Bitcoin’s price has increase more than 5 times its value. While future price rise isn’t guaranteed, it is highly anticipated. The move to the $4600 levels signals that the market is looking for new support. The $4500 level has been a war zone for the past couple of days, but is now acting as support during the recent price spike.
North Korea-Japan Conflict Fueling Bitcoin Demand
In previous coverage, The Merkle extensively explained the increase in demand towards bitcoin from retail, professional and institutional investors as a safe haven asset and a robust store of value. In times of economic uncertainty and global markets instability, investors in the traditional finance sector prefer to migrate to bitcoin and to the cryptocurrency market to avoid losses.
Two days ago prior to the price spike, prominent financial analyst and the host of RT’s Keiser Report Max Keiser stated that the demand bitcoin will likely rise in the upcoming days due to the rising tension between North Korea and Japan.
“Bitcoin moving higher attracting safe haven money on news of North Korea’s missile launch over Japan,” said Keiser.
Additionally, an increasing number of mainstream media networks in the US, South Korea, Japan and China, four of the world’s largest bitcoin and cryptocurrency markets, have started to extensively report on bitcoin and price trend once again, fueling another upward momentum and strong rally.
“Bitcoin will probably break $5,000 this week, starting a new media blitz, creating new wave of buyers who will power price toward $10,000,” Keiser added.
Analysts including Keiser predicted a new wave of buyers and investors to come into the cryptocurrency market and invest in bitcoin amidst serious global financial instability.
Scaling and Lower Transaction Fees
Even after the completion of the Segregated Witness (SegWit) update, the transaction malleability and scaling solution proposed by the Bitcoin Core development team, many users and investors of bitcoin expressed their concerns in regard to bitcoin’s rising transaction fees.
Although developers such as Jeff Garzik criticized high fees of the bitcoin network, it is important to understand that in order for SegWit to decrease transaction fees, users must deal with SegWit-enabled transactions to begin with.
The first major step towards decreasing transaction fees with SegWit is the adoption and integration of the solution by wallet platforms. Already, Trezor and Ledger, two of the most widely utilized bitcoin hardware wallets in the market, have integrated SegWit. In its recent statement, the Ledger development team stated that users utilizing its SegWit wallet will be able enjoy an immediate 35 percent reduction in transaction fees.
“Segwit introduces the concept of block weight which changes the way the transaction size is computed by splitting the signatures in a different area — you can typically save 35% of the fee paid when sending a transaction immediately,” said Ledger.
With fees and bitcoin blocks optimization in sight due to the integration of SegWit by leading bitcoin wallets, and increasing positive media coverage on bitcoin’s recent rally, it is likely that bitcoin price can achieve a new a new milestone by surpassing the $5,000 mark, as predicted by Keiser.
The current RSI is at 74, it just now passed the stable threshold and is hinting at an overbought market. Taking a look at this chart from bitcoincharts we can see that the last time the RSI hovered in the dangerous territory above the 70 level, the price pulled back.
It may be a good idea to keep an eye on the RSI, if it stays above 70 the market is at risk for a replacement.