Over the past 24 hours, followed by the strong rally of Bitcoin price from $6,400 to $6,750, the crypto market rebounded strongly. Cardano and Litecoin, the two best performing major cryptocurrencies on September 28, recorded 10 percent gains.
Within 10 hours, the price of ADA, the native cryptocurrency of Cardano, increased from $0.078 to 0.0876, by more than 12.3 percent. While most cryptocurrencies have slightly retraced after achieving a weekly high, the market has started to rebound once again.
Ethereum (ETH), which was overtaken by Ripple (XRP) on two occasions within the past week, solidified its position as the second most valuable cryptocurrency in the market. The gap between ETH and XRP has increased to $2 billion, following a 7 percent increase in the price of ETH.
From August to late September, ETH has shown lack of momentum and increasing sell pressure, most likely due to the fear of investors that initial coin offering (ICO) projects will dump ETH on the cryptocurrency exchange market in the months to come.
As researchers at Diar previously reported, ICO projects still hold over 38 percent of their ETH holdings stored in treasury. Larry Cermak, head analyst at Diar, stated that sell pressure on Ethereum is unlikely to decrease in the months to come, given the large amount of ETH ICOs still control.
“There is a big misconception that ICO companies have liquidated most of their ETH holdings. On average, all of these projects have moved or liquidated 62 percent of the amount that they initially raised. In other words, they are still holding 38 percent of the initially raised amounts. This, in turn, creates ETH selling pressures, which are unlikely to go away any time soon. The price is affected not only by the ETH mining issuance but also by ICO companies liquidating to cover their expenses,” Diar report read.
It is always possible for ETH to experience an abrupt decline in value given the likelihood of ICOs liquidating their holdings in the future. But, it is also important to consider the large 45 percent correction ETH recorded in the past two months and the oversold conditions ETH has been demonstrating as a consequence.
Over the past 48 hours, Ethereum has made a strong attempt to break out of the $200 region, eyeing a potential rally to the $300 mark. Another strong short-term rally could allow ETH to recover from its current price range, which is likely considering the price trend of ETH since mid-August.
Bitcoin is also expected to break out of the $6,800 resistance mark in the next 12 to 24 hours, a move that would allow the dominant cryptocurrency to eye an entrance into the $7,000 region by the end of the week.
The cryptocurrency market is currently in an ideal position to initiate a short-term rally. The volume of Bitcoin, Ethereum, and most major cryptocurrencies remained relatively low throughout the week. In the past 12 hours, the volume of Bitcoin picked up, showing decent momentum.
Featured image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:45 PM