In the past 24 hours, the Bitcoin price has increased from $6,400 to $6,700, recording a decent increase in its daily volume.
The valuation of the crypto market has increased from $210 billion to $215 billion within a two-day period, fueled by the short-term surge in the price of tokens.
Ethereum-based tokens like Wanchain, Aion, and ICON recorded solid gains in the range of 10 to 20 percent against both the US dollar and Bitcoin, showing some momentum against major cryptocurrencies.
Ethereum, Ripple, Bitcoin Cash, and EOS, the top five cryptocurrencies in the global market, have struggled to demonstrate a recovery in their volume and price, closing the day with mere 0.3 to 1 percent gains, falling behind Bitcoin and the rest of the market.
In previous reports, CCN noted that the dominance index of BTC, which measures the dominance of the cryptocurrency over the global market, is an important metric to measure the short-term growth and momentum of tokens and small market cap cryptocurrencies.
In the past seven days, the dominance index of BTC has increased from 51 percent to 53.6 percent, despite the recovery in the price of BTC.
Under normal circumstances, tokens tend to demonstrate 10 to 20 percent gains if BTC rises by 3 to 5 percent in value, as investors become more confident in investing in high-risk and high-return trades. However, this week, tokens have not been able to record large movements on the upside.
Bitcoin’s strong dominance over the market suggests that investors are thoroughly convinced that the corrective rally from $6,200 to $6,700 has established a platform for the rest of the market to continue a short-term rally over the upcoming weeks.
While many analysts have suggested that the momentum of Bitcoin will likely enable the dominant cryptocurrency to surpass the $7,000 mark, it may take Bitcoin to break out of the $7,000 resistance level for tokens to see a rapid increase in value in the short-term.
Throughout the past few months, BTChas declined by more than 30 percent, from the $9,000 region to mid-$6,000. Tokens have fallen 60 to 70 percent against Bitcoin, recording 95 percent losses against the US dollar.
Over the past 12 hours, 10 percent of Bitcoin short contracts on Bitfinex, the biggest margin trading platform in the cryptocurrency market, have been closed, suggesting that bears are not confident in betting against the newly found momentum of Bitcoin.
As such, it is more likely for Bitcoin to test the $7,000 mark in the next few days, rather than dropping back to the lower end of the $6,000 region.
Erik Voorhees, the CEO of ShapeShift, one of the most popular peer-to-peer digital asset exchanges in the market, has said that the bear market is not over for crypto but it is a good time to accumulate given the low price range of most cryptocurrencies.
Most investors still expect the price of Bitcoin to endure one last minor correction before initiating a mid-term rally but the general sentiment around the crypto market remains positive.
Featured image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 6:05 PM UTC