Bitcoin Price Soars 42% to $10,500 — Biggest Daily Gain Since 2011

The last 24-hours have been an absolute roller coaster for Bitcoin price (BTC). Earlier in the week, BTC swiftly dropped by 10% after failing to hold above the $8,000 support.

Crypto market data daily view

Crypto market data daily view. Source: Coin360

By Thursday, BTC/USD was sitting on the bottom trendline of the descending channel and many investors and analysts were calling for a drop to $7,000.

A few even predicted that a revisit to the long-term support at $6,500 was on the cards. Despite the bearish bias, traders like Scott Melker and Michaël van de Poppe spotted a series of bullish divergences on the 4-hour and daily timeframe and by Friday morning (Oct. 25) the chart and various indicators on the hourly and 4-hour timeframe were flashing bullish.

Investors believed that a quick upside move to $7,700-$7,800 would occur and many expected that bears would open their short positions at the top of this range and eventually push Bitcoin price back down to the mid $7,000s or high $6,000s at worst. 

Bitcoin price does the opposite

Obviously, this is exactly what did not happen and the short squeeze that accompanied the first part of Bitcoin’s 16% rally from $7,450 to $8,600 resulted in the liquidation of $150 million shorts at BitMEX.

BitMEX XBT USD Liquidations

BitMEX XBT USD Liquidations. Source: Skew.com

After such a strong move, consolidation around the $8,300 to $8,500 region was the next expectation that traders had in mind. Tackling the $8,800 resistance would have been the next step and it seemed likely that this would play out depending on the state of the weekly candle at closing. 

Surprisingly, Bitcoin bulls gathered up enough steam for a final hurrah, and towards the evening of the U.S. trading session bulls pressed Bitcoin price far above the $8,800 resistance to set a higher high at $10,540.

Analysts and traders will probably spend the weekend searching for the exact reasons that catalyzed today’s strong 36% surge — the biggest daily gain since 2011. 

Currently, the crypto community is pointing to Chinese President Xi Jinping’s call for the development of blockchain technology throughout the country. Bakkt’s Bitcoin futures back to back all-time high volume achievements are also being cited as a reason for Bitcoin’s surge. 

What are the next steps?

BTC/USD daily chart

BTC/USD daily chart. Source: Tradingview

As shown by the daily chart, Bitcoin bounced off the descending trendline at $7,400, rallied up to the 61.8% Fibonacci retracement level, then rocketed through the 111, 128 and 200-day moving averages (DMA). 

The volume profile visible range shows that numerous levels of resistance were sliced through and the wick to $10,542 set a higher high not seen since Sept. 6. Bitcoin stopped its advance right at a high volume node (VPVR) and a move above $10,542 should proceed toward $10,970 and $11,500, and then to $12,000, according to the daily chart. 

If Bitcoin can clear $12,000 over the coming weeks, it could be set for a blue sky breakout.

Death cross averted, for now

BTC/USD daily chart

BTC/USD daily chart. Source: Tradingview

At present, the forecasted death cross between the 50 and 200-DMA has been avoided and the 50 DMA is curling away from the 200 DMA. 

The MACD line shot far above the signal line and the bullish divergence that analysts identified on the daily MACD and RSI proved to be an early indicator of what was to come. 

Divergence is simply when the price trends in one direction and an oscillator trends in a counter direction.