Over the last 24 hours, the Bitcoin price has experienced a seven percent recovery from $3,210 to $3,433, avoiding a further drop below the $3,000 support level.
Many traders expected Bitcoin (BTC) to rebound from the $3,000 to $3,300 range because the $3,000 support level has shown strength throughout the past two weeks.
Ethereum (ETH) recorded a 15 percent increase from its daily low and ERC20 tokens such as Quarkchain, OmiseGo, and 0x demonstrated gains in the range of 5 to 15 percent, due to the integration of tokens by Coinbase.
The Coinbase team said on December 7:
“We are exploring the addition of many new assets beyond ERC20 tokens on a jurisdiction-by-jurisdiction basis.”
According to Collin Crypto, a Bitcoin trader and a venture capital investor in the cryptocurrency market, Bitcoin shorts achieved an all-time high on Bitfinex, one of the largest digital asset trading platforms in the world that allow margin trading.
It is possible, given the aggressive short contracts filed on major exchanges, that shorts were squeezed out and intensified the corrective rally of the dominant cryptocurrency.
As such, it is too early to confirm a trend reversal, especially since the asset has not been able to test important resistance levels in the high $3,000 region. If the volume of the asset fails to hold up, another large correction in a low price range could materialize.
One analyst said:
“Something to keep an eye out for before you start popping bottles. The previous two times we have seen a strong green candle, it goes something like this. Pump directly into resistance. A 2nd weaker volume retest. Slow bleed into an accelerated dump.”
David Puell, a Bitcoin and market analyst, said that a short-term bottom and trend reversal could be achieved in the upcoming days if the asset begins to show some stability.
“Picking up signs of accumulation: the effort not matching results is a sign of local reversal,” Puell said.
However, until the Bitcoin price surpasses major resistance levels above the $3,700 mark, it’s not possible to conclusively state that a proper bottom is established to initiate a mid-term rally.
Although the price trend of ERC20 tokens hugely depends on the short-term price movement of Bitcoin and other major cryptocurrencies like Ethereum, Coinbase has started to aggressively integrate new assets into its platform.
After adding Decentraland, Loom, Civic, and District0x, the company said that it intends to add even more assets in the months to come.
One of the main reasons behind the significantly large price decline of ERC20 tokens has been their low liquidity and daily volume. Most tokens are currently being traded with less than $10 million in daily volume.
Increasing liquidity and proper infrastructure provided by Coinbase and potentially more strictly regulated cryptocurrency exchanges in the U.S. market could allow many tokens to recover in value throughout the months to come.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: June 14, 2020 9:35 AM UTC