Over the past 24 hours, Bitcoin Cash initiated a 20 percent rally fueled by the initial public offering (IPO) of Bitmain but the rest of the crypto market remained relatively stable at a low price range.
The valuation of the cryptocurrency market has maintained its position in the $215 billion range, as Bitcoin and ETH, the native cryptocurrency of Ethereum, both recorded a slight increase in price of 0.5 percent.
Crypto Dog, a respected technical analyst in the cryptocurrency community, stated that if the valuation of the bitcoin market comfortably breaks out of the $114 billion mark, then a short-term rally could materialize.
“This is exactly what you want to see on a retest. So far so good. Clear the $114 billion marketcap resistance and we’re due for another large gap up,” he wrote.
Throughout this week, many experts and prominent investors including billionaire hedge fund legend Mike Novogratz emphasized $6,600 as an important resistance level for Bitcoin.
Throughout the past several days, Bitcoin has been on a downtrend, declining from around $6,520 to $6,440. Still, as it did on September 26, as long as the volume of bitcoin can be sustained in the mid-$4 billion region, it is possible for the dominant crypto to initiate a minor rally in the short-term.
But, Bitcoin would need to rebound quickly to the $6,600 region in the next few hours to confirm a short-term rally. Since achieving $6,550 around 18 hours ago, Bitcoin has been on a downward trend. If Bitcoin fails to break out of the $6,500 region, given its increasing sell pressure since September 22, it is highly likely that BTC tests the lower end of $6,000.
If Bitcoin experiences a spike in volume and does break out of the $6,500 mark comfortably in the upcoming hours, a strong short-term rally of tokens is expected, especially since Ripple (XRP), Ethereum (ETH), and Bitcoin Cash (BCH) have outperformed tokens in the past week and most tokens have struggled to record any major movement on the upside.
In short, the low volume of Bitcoin presents a problem for traders, as the low volume could lead BTC to drop below the $6,400 mark in the next 12 to 24 hours.
Although most major cryptocurrencies and tokens have massively outperformed Bitcoin since mid-September, the general trend of the market still heavily depends on the performance of Bitcoin. Given the weak short-term movement of Bitcoin, it is likely that tokens will not initiate a short-term rally in the near future unless BTC shows a strong recovery.
Already, XRP and BCH have started to retrace, with Ripple falling by more than 3 percent within minutes which once again increased the gap between Ethereum and Ripple to a billion dollars.
Due to the unpredictability of cryptocurrencies in recent weeks, the current phase in the crypto market does not offer a viable opportunity for investors to explore high-risk trades, especially tokens as they generally rely on the price movement of Bitcoin.
Featured image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 5:57 PM UTC