Cryptocurrency prices have jumped sharply this week as investors bet on the so-called TradFi. Bitcoin price has just jumped by over 20% in the past seven days while the total market cap of all coins has soared to over $1.3 trillion. Most tokens, including Jasmy, Solana, and Zilliqa have all jumped by double-digits this week.
Is this a bull trap?
There are signs that the momentum in the crypto market is fading. For example, Bitcoin has been stuck at $30,000 while Ethereum has held steady at $1,800. A quick look at CoinMarketCap shows that most tokens have moved sideways in the past 24 hours.
The main reason for the recent rally is that several large companies have moved to the crypto industry. On Thursday, we reported that Credit Agricole had secured a crypto custody license. This is notable since this French company is the third-biggest bank in Europe. Deutsche Bank also applied for a custody service.
In the US, companies like Blackrock, Invesco, and WisdomTree have applied for spot Bitcoin ETF licenses. Analysts believe that the SEC could be under pressure to acccept these new applications since Bitcoin is maturing. Jerome Powell, the Fed Chair, supported this saying that cryptocurrencies had staying power.
These events helped to supercharge Bitcoin and other crypto prices since they came at a dark period for the industry. Early this month, the SEC decided to launch major lawsuits against Coinbase and Binance, the biggest companies in the industry. As a result, the TradFi news helped to ameliorate the pain.
BTC to spark a crypto bonanza
As shown above, Bitcoin price came close to the important resistance point at $31,091 this week. This was an important price since it was the highest level this year. Now, bulls need to urgently move above this level to confirm the bull run.
Doing this is important for two main reasons. First, it will send a signal that there are more buyers left in the market. These buyers are willing to buy BTC above the highest point this year.
Second, crossing this level will invalidate the double-top pattern that has been forming and whose neckline is at $24,735. A double-top is one of the most dangerous patterns in the market. If this happens, it will open the possibility of BTC price surging to the next psychological level at $35,000.
Most importantly, such a move will spark a crypto bonanza since BTC tends to have a close correlation with the likes of Jasmy, Zilliqa, MATIC, and Solana. In most periods, these altcoins tend to do better than Bitcoin in a bull market.