The total market capitalisation of cryptocurrencies surged back above $300bn, as broad-based buying saw digital currencies recover from lows. On Thursday morning, Bitcoin jumped by more than $1000 to trade over the $8000 handle. Ethereum also made a significant upside move to trade above $500. The recovery could be attributed to a number of factors. Firstly, the expected selling pressure due to U.S tax payment deadlines seems to have abated. Second, the ratio of short trades versus longs in Bitcoin have been at extreme levels and, as buying increased, the shorts got liquidated, causing a squeeze. This can be seen below in the net position on Bitfinex swinging back into positive.
Finally, some reports suggest the Bitcoin spike was due to a large intuitional investor with a purchase order on Bitfinex.
On the daily chart, Bitcoin spent a number of days at the trend line support at 6500. Since then, the price action appears positive, with a break of the falling resistance trend line. If the bullish move continues, the next level of resistance is 9400-9500, which is near the 23.6% Fibonacci and 200MA. A break of that level would open the way for further gains towards 11500. If there is a bearish reversal below the trend line, a re-test of 6500 is likely and a break would see a move to 5000.
On the daily chart, Etheruem has a similar pattern to Bitcoin, in that the price was supported by the July trend line near 360. In a similar manner, ETHUSD has broken above the falling resistance trend line to trade above the psychologically important 500 level. The major hurdle to the upside will be the 23.6% Fibonacci and 200MA confluence at 615, followed by 770. If ETHUSD drops back below the falling resistance trend line, a test of 360 is likely, with further downside support at 270.