Bitcoin prices broke past the $2,000 mark for the first time last week. Due to the important developments in this space during the past few days in this article we will only cover BTC (sorry litecoiners).
Bitcoin Breaks $2,000 on Scaling Agreement
Bitcoin prices broke above the important $2,000 handle last week. After some consolidation around the area prices surged higher to top out at $2,226 on bitcoin forex broker FXOpen. The primary driver behind this surge was speculation about a scaling agreement at the Consensus 2017 conference.
The rumored deal was set to be published on Monday morning US time. When this didn’t transpire, prices crashed, testing $2,000 on most exchanges (see chart below). On FXOpen we traded as low as $2020 before a recovery rally began. The reversal was helped by the official agreement announcement on Tuesday that sent prices back near all-time highs.
The agreement calls for the implementation of Segwit along with increasing the size of the blocks from 1 MB to 2 MB. It’s seen as sort of a compromise deal between the two conflicting camps. The deal was accepted by most major mining pools as well as the two major payment processors (Coinbase & BitPay) and some of the biggest bitcoin exchanges. Others like BitStamp, Kraken and Bitfinex have not signed in yet. Notably absent from the deal agreement were bitcoin developers. It remains to be seen if they will join into work on the new proposal.
The official news announcement on Tuesday had a small positive impact. A large part of it was probably being priced in during the $2,000-$2,200 pump. Still, it’s possible that prices could run a lot higher if bitcoin developers are willing to join on the compromise.
Technically BTC/USD is still during the uptrend started around the $1,200 mark. With gains of close to 100%, it seems that the rally should be coming to an end. But don’t forget that during the Litecoin Segwit rally prices increased five-fold during the initial reaction ($4 – $20) with further gains above $30 on the Coinbase add news.
Being that bitcoin is a bigger cap cryptocurrency, we may not get that large of a market reaction but a doubling in prices is not as crazy as it sounds. Volatility is high right now so trade sizes should be kept small. Large $200 swings up/down seem to be the norm, as we saw during the past few days. Support below can be found near the swing low at $2,020, followed by the $2,000 round figure. We have a resistance higher up near the all-time highs at $2,250. A move below the $1,600 swing low is needed for a definitive end to the bull trend.