BTC is ready to storm $9000 levelMay 27, 2019
12 out of 16 cryptocurrencies, with a capitalization of more than $1 billion, ended the week in the green zone. The growth leader was the Bitcoin SV (BSV) coin, adding 67% to the cost, Binance Coin BNB and Litecoin LTC went up by 21% and 22%, respectively.
BTC capitalization reached $154 billion or 57.4% of the total market. Ethereum (ETH) continues to break away from Ripple (XRP), and now the gap between the second and third position in the TOP cryptocurrency rating exceeds $11 billion.
On the last day of the week ended, BTC buyers managed to overcome a strong technical resistance level of $8200. Most likely, this led to a massive closure of short positions, thereby significantly increasing the demand for BTC. As a result, on Monday, May 27, was set a maximum of $8958 (Bitfinex). According to CoinMarketCap, the price of BTC has come close to the $8850 level. It is worth noting that after the wave of growth, there was no corrective decline. It is an excellent signal for buyers, indicating increased activity of bulls.
One of the main ideas of cryptocurrency is decentralization. Thus, no user or group of users can reorganize the chain, creating branches. In simple words, individual miners cannot create non-existent coins. To do this, you must have 51% or more computing power.
But last week occurred “51% attack” which shows the weak side of this statement. Large mining pools BTC.com and BTC.top carried out a “51% attack” to cancel the transaction of another miner who tried to gain access to funds that did not belong to him.
We are talking about coins that were created at the time of separation of Bitcoin Cash from BTC and redirected to the addresses of the format anyone can spend. Developers blocked all these coins, but the last hard fork allowed an unknown miner to assign the coins.
BTC.com and BTC.top, which control more than half of the network’s hash rate, quickly reorganized it, not allowing the hacker to take over these coins.
In this particular case, the “51% attack” has positive consequences and was carried out with good intentions. But, in fact, the network is vulnerable since two large miners have the opportunity to attack for personal gain.
The breakthrough of the long-term trend
The incredibly strong growth of BTC and the entire cryptocurrency market, over the past eight weeks, indicates a definite change in sentiment. The reason for such strong growth was the fact that big business needs cryptocurrencies.
The fundamental factor was the decision of Donald Trump to raise tariffs on all goods imported from China. It is worth noting that a 25% increase in tariffs is approximately $200 billion. For comparison, the capitalization of all cryptocurrencies, at the time of an increase in US tariffs, did not exceed $200.
According to experts, cryptocurrency can be one of the tools for evading payment of new tariffs, which was the impetus for growth. Trade relations between the two largest economies in the world continue to deteriorate, moving into the phase of the “cold war”. As a result, there is a risk of a slowdown in the global economy, which in turn will lead to a decrease in the largest stock indices. At this moment, there is a migration of capital and one of the directions is the cryptocurrency market. In this case, cryptocurrencies will act as defensive assets or alternatives.
We highlight that the major US stock indices are already falling, responding to the trade conflict. Since early May, the S&P500, DJIA and NASDAQ 100 indices have adjusted by 4% or more. Considering that the capitalization of this market is estimated at trillions of US dollars, even a partial outflow of capital to the cryptocurrency market provides incredibly strong support to the main coins. Thus, there are all prerequisites for a further increase in the capitalization of BTC.