Over the past few hours, Bitcoin has recorded a slight 1 percent increase in price, nearing the $6,800 resistance level. The rest of the crypto market recorded large gains across the board as Electroneum and Stellar led the market with 70 percent and 20 percent gains respectively.
As CCN reported on September 22, billionaire investor Mike Novogratz laid out $6,800 and $8,800 as major resistance levels for BTC in the short-term. If BTC can break out of the $6,800 mark in the next few hours, it is highly likely for the dominant cryptocurrency to enter the $7,000 region for the first time since September 4.
Over the past week, Bitcoin has demonstrated decent momentum and gradual increase in volume, rising from the lower end of $6,000 to $6,700. But, in comparison to other major cryptocurrencies like Ethereum and Ripple that recorded monstrous gains against the US dollar, the short-term rally of Bitcoin has been lackluster.
The discrepancy between the gains of Bitcoin and the rest of the market can be attributed to the stability of the dominant cryptocurrency. From July to September, for nearly three months, Bitcoin has demonstrated a slight loss of 9 percent. Meanwhile, Ripple and Ethereum declined by more than 45 percent.
As such, the corrective rally of the crypto market that was initiated earlier this week, which was primarily formed due to massively oversold conditions showed by major cryptocurrencies, did not lead to a large increase in the price of BTC.
But, as Novogratz stated, considering the stability in the price of BTC and its resilience in the low price range, breaking out of the $6,800 mark and eyeing an entrance into the $7,000 region could establish a strong foundation for a potential mid-term rally later this year.
Exchange-traded funds (ETFs), institutional investors, and large-scale hedge funds will likely not enter the crypto market in 2018. The US Securities and Exchange Commission (SEC) has no reason to rush its decision to approve the first cryptocurrency-backed ETF in the country’s history and while there exists trusted custodian solutions in the market, institutional investors will likely wait out until the asset class recovers and for the market to mature.
Hence, if Bitcoin reaches $10,000 by the end of this year, which Novogratz said it is impossible for it to not happen, it will be individual investors and retail traders leading Bitcoin to its yearly high.
Considering that many billions of dollars from institutions will not hit the market for at least a couple months, it is important for Bitcoin to gradually climb to $8,800 and $10,000, to reduce the probability of a major retracement.
The volume of the crypto market remains strong at $14 billion, but the volume of Bitcoin has declined from over $5 billion to $4.2 billion, which suggests that either the market has started to take a breather or investors are focusing on high-risk trades to maximize profit.
Featured image from Shutterstock. Charts from TradingView.