Within minutes, on January 6, the Bitcoin price spiked from $3,830 to $4,030 by around five percent. The sudden increase in the price of Bitcoin led other major crypto assets to spike in value.
Ripple, Bitcoin Cash, Litecoin, EOS, and Stellar recorded gains in the range of 3 to 12 percent on the day, demonstrating solid momentum over the last 24 hours.
With a $7 billion increase in the combined value of cryptocurrencies, the market has initiated a decent short-term price movement.
But, as a cryptocurrency trader with an online alias “The Crypto Dog” said, the valuation of cryptocurrencies would have to break out of major resistance levels in the range of $160 billion to $180 billion to call for a convincing short-term rally.
“Another day, another lacklustre move. Is this the top? I’m looking for $180 billion if we can turn $140 billion into support, otherwise not much to get excited about just yet,” the trader said.
For three months the market has hovered between $100 and $140 billion. As seen in the yearly chart below, short-term volatility in a low price range doesn’t present a proper accumulation period.
Many traders anticipate an increase in market capitalization to $180 billion as a potential catalyst for a mid-term rally. Even a recovery to $200-$250 billion range could still leave the market vulnerable to a future additional drop in value.
There exists several catalysts in the likes of the scheduled launch of Bakkt, the U.S. Securities and Exchange Commission (SEC)’s decision on the VanEck Bitcoin exchange-traded fund (ETF) filing, and the development of Nasdaq’s Bitcoin futures market that may contribute to a potential rally of cryptocurrencies in the first quarter of 2019.
However, the probability of the three events materializing within the next two months is slim. Bakkt already delayed the launch of its futures market. Hester Peirce, a pro-crypto commissioner, said that investors should not wait on the approval of the ETF as it could be days or years.
The market needs more than a short-term rebound.While positive, it doesn’t alter the ongoing trend.
Cryptocurrency needs to reach November levels. That’s $230 billion in valuation and around $6,000 for Bitcoin. Until then, it’s a challenge to declare a trend reversal or an end to the bear market.
Throughout the foreseeable future, several cryptocurrencies including Ethereum that are expected to undergo major protocol changes may continue to see an increase in their value.
Ethereum’s Constantinople hard fork lays on the horizon. It has increased by around 80 percent in value in the past three weeks.
Featured image from Shutterstock.
Last modified: May 20, 2020 1:01 PM UTC