Bitcoin: Why Its Price Shot Up

in bitcoin •  7 years ago 

Today I woke up early, took a shower, got dressed, when on Coinmarketcap.com, and nearly spat out my coffee seeing Bitcoin up by double digits.

My first thought, as well as most of your thoughts, is why has it risen? Is it due to good news? Has the Lightning Network made progress? Are we finally out of the rough slump? After some digging, I believe the answer to all of that is NO.

Bitcoin follows a strange pattern that I have been trading off of for well over 6 months; when the mempool is full, its price momentarily spikes. When the mempool is empty, Bitcoin's price momentarily dips. It is such a strange phenomena that should ideally be vice-versa, as an empty mempool would mean lower fees for users.

So, let's look at why it would be going up when the mempool is full then. That would signify likely one of three things:

  1. Miners are getting greedy and are picking blocks with higher fees.

  2. An influx of volume has filled the mempool

  3. A low fee spam attack

After carefully analyzing these three scenarios, I believe choice (2) is the reason. The influx of volume I do not believe is organic. I do believe it is whales enticing FOMO with preparations to dump. If I was a short term trader, I would sell, watch the mempool for it to clear, and then buy BTC on a dip.

I am not a professional financial adviser. Make your own decisions wisely.

Good website tracking Bitcoin mempool: https://jochen-hoenicke.de/queue/#1,24h

Good website for tracking Bitcoin Volume: https://data.bitcoinity.org

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!