Waking up and looking at your crypto portfolio hasn't been so much fun in many months. Bitcoin closed around €22.700, the highest daily close in over five months and a daily increase of 10%! Ether and several altcoins pumped similar percentages. What explains the rally, and could this be the beginning of a new bull market?

The short answer to the first question is that there were more buyers than sellers yesterday. Duh. Add to that the liquidations of short sellers turned-into-buyers: $60 million worth of BTC became forced buyers as the Orange Coin's price started going up and caught them off-guard.  

That's the surface explanation. But what about the macro-economic backdrop of this pump? The Consumer Price Index data that were released two days ago were not great but not that bad too. In an environment where so much bad news is already absorbed, slightly bad news is apparently enough to have the price go up... 

The same rationale might apply to the recent trend of operation chokepoint 2.0: in recent days, the crypto markets have had to come to terms with the fact that there will be headwinds from US regulations. But apparently, it isn't deemed an existential risk to crypto in the US - at least for now.

'Max pain' is up

A lot of macro analysts, such as Raoul Pal, have pointed out that the extremely negative sentiment around crypto of the past months, could be an opportunity for people who counter trade that sentiment. After all, in trading, most gains can be made by being a contrarian. Of course, risks are also high if you take that approach... 

Currently, there are record percentages of stablecoins sitting on the sidelines, waiting to be deployed in BTC, ETH, and altcoins. Once the BTC price starts rallying, people will feel the fear of missing out, convert their 'stables', and push the price higher fast. In other words, as many traders have small crypto bags, a move to the upside would hurt the majority most in the current market conditions! Max pain is up... 

Not out of the woods yet

It's reassuring that prices don't react so much anymore to negative news. This signals that the worst part of the bear market might be behind us. So, can we all rejoice? Is this the beginning of a bull market? Hold your horses... In fact, BTC/USD still hasn't crossed the 200-week moving average, which has acted as price support for Bitcoin in its entire history- until June last year. To confirm the end of the bear market, crossing that line - at around 25.000 USD - which is now resistance, is vital. See graph below.