In yesterday’s report, CCN noted that Aelf, the decentralized cloud computing blockchain network developed by a team of Chinese developers, increased by more than 17 percent against bitcoin. Today, on May 20, the price of Aelf increased by another 10 percent, becoming the second best-performing cryptocurrency in the market for two straight days.
Trend of Tokens
Throughout May, tokens have demonstrated an intensified movement on both the upside and downside, following the price movement of bitcoin. As the price of declined, the value of tokens fell by substantially larger margins and as the price of bitcoin increased, the value of tokens surged significantly more than bitcoin.
Essentially, investing in tokens in a recovery period with extreme volatility and uncertainty is similar to leverage trading and depending on the price trend of bitcoin, the value of tokens can either plunge or surge by large margins.
On May 17, the bitcoin price reached a two-month low at $7,925 and as the bitcoin price fell, the price of Aelf (ELF) and 0x (ZRX) also fell to their monthly lows. However, as the bitcoin price rebounded from $7,925 to $8,300, ELF rose from 0.00014 BTC to 0.000162 BTC and ZRX rose from 0.00015 to 0.000174 BTC, both recording large gains against bitcoin.
Despite their 20 percent gains over the past 48 hours, the Relative Strength Index (RSI) of both ELF and ZRX are at around 55, signifying a neutral zone for the two tokens. ELF and ZRX are still in an ideal position to record a short-term rally as the exponential and simple moving averages of both tokens demonstrate a positive price trend in the upcoming days.
As of current, because the price of most alternative cryptocurrencies (altcoins) and tokens heavily rely on the short-term price trend of bitcoin, investors have to focus on the price movement of bitcoin throughout the next few days.
If the bitcoin price can sustain its momentum in the $8,400 region and break the $8,800 support level, it could enter the $9,000 region relatively quickly and secure a chance to surpass the $10,000 support level by the end of May. However, if the bitcoin price falls back below the $8,200 resistance level, it is possible that the bitcoin price falls back to the $7,900 region again, which is unlikely considering the stability in the price of bitcoin since May 18.
The price of bitcoin has not been able to secure sufficient momentum to test the $8,800 support level which eventually could lead the bitcoin price to the $10,000 region in the short-term. The struggle of bitcoin can be attributed to the concerns of investors on major exchanges like Bitfinex that have started to demand users to forfeit their tax IDs and social security number, possibly due to increasing pressure from governments.
Although Bitfinex is not the biggest cryptocurrency exchange in the world, it is considered as one of the largest cryptocurrency-to-fiat exchange and the exchange’s new taxation policy led investors to panic and become fearful towards gains tax that could be imposed by the financial authorities in their countries.
Featured image from Shutterstock.