Basically, if the engines do not have the power then ‘up’ very quickly becomes ‘down’. Right now, bitcoin is resembling a supersonic jet packing enough thrust to propel it through the cloud base of $4,500. Despite a slip up over the last few weeks, the world’s leading cryptocurrency has been on a steady trajectory since brushing the tree tops after arresting a worrying dive towards the runway. A little turbulence has been experienced along the way, but the last few days have all ended with green arrows on the exchanges.
Bitcoin’s passengers were served a tantalising breakfast of $3,995 this morning and, if the crew can climb continuously throughout Friday it will mark six days of impressive ascent.
A lot of those people have made money off the back of the recent low, with plenty of investors jumping in as it scraped the $3,000 mark this time last week.
There has been plenty of buying activity, and it continues as investors full of festive spirit get carried away with the memories of $6,500 from much of 2018.
However, at the risk of sounding like a Christmas curmudgeon, there is a popular old adage that a wise watcher of the markets would no doubt pull out at this stage… what goes up, must come down.
As it is also pantomime season, boos and hisses will no doubt be the order of the day towards any hint of measured caution in a market as volatile as Cinderella’s stepmother.
Sadly, a health and safety announcement should be made for the sake of anyone trying to jump into the joyous noel currently engulfing cryptocurrency like a flaming Christmas pudding doused in too much brandy.
Without milking the principle of flight metaphor too much, this aircraft surely doesn’t possess enough fuel to take it much higher.
There simply is not enough volume in the market.
Quite what is keeping it in the air is anyone’s guess, although it is a fair assumption that traders are hell bent on cutting off their exposure before putting their feet up for Christmas.
If that is the case, which seems the most likely explanation, then this whole rally over the last week can be put down to people wanting to reduce their risk.
That should start chiming some bells – and not the ones on Santa’s sleigh, actual alarm bells.
The high created by this sort of short covering has the unmistakable stench of a false position, and the concern here would be the possibility of what could happen in the days after the echoes of Auld Lang Sine have stopped ringing in our sore heads.
No volume, a false high and the distraction of Christmas.
All the ingredients are there for an almighty collapse in many people’s eyes.
On the other hand, there is always the possibility that, fuelled by cheer and goodwill to all cryptos, all that spare time over the next week or so might bring the volume back.
It is stretching it a bit, but there is a sense in some quarters that bitcoin has broken free of the falling wedge it found itself on mid-November and is now full of bullish vigour.
The test of that seemingly far-fetched theory will be over the weekend.
If bitcoin can rise even further and break through the resistance of $4,400 then something else suddenly comes into view… $5,000.
Common sense says that’s just a fantasy, but cryptocurrencies never fail to surprise.
And, of course, the cautious trader would say that, if bitcoin did do something remarkable like break the $4,400 resistance this weekend, then it will simply have further to fall as we stagger into the new year.