Usually, stability in the Bitcoin price leads to an increase in the momentum of tokens. On August 21, tokens recorded the largest losses in the global crypto market.
In the past 24 hours, tokens such as Tezos, Kin, Ark, Basic Attention Token (BAT), and Aelf (ELF) declined by 5 to 15 percent against both the US dollar and Bitcoin, demonstrating high volatility.
Meanwhile, Bitcoin recorded its 14-month low monthly volatility, showing stability in the lower price range of $6,500. The dominant cryptocurrency recorded a slight gain of 0.2 percent as other major cryptocurrencies like Ethereum’s Ether, Bitcoin Cash, Ripple, and EOS recorded losses.
The token market has tended to follow the price trend of Ethereum, Ripple, and EOS in the past few weeks, and the 5 percent decline in the price of EOS was reflected by the struggle of tokens throughout the past 48 hours.
On August 18, tokens seemed to be recovering, as Ontology, VeChain, Aelf, ICON, and other large market cap tokens recorded 30 to 70 percent gains against the US dollar. However, in the past two days, many of the tokens have deleted their gains against Bitcoin, showing a lack of momentum and volume.
In previous reports, CCN noted that stability is the most important element in the price trend of Bitcoin that could lead and fuel the next mid-term rally in the global crypto market.
Initially, analysts described the recovery of Bitcoin from $5,800 to $6,300 as a short-term corrective rally initiated by traders due to massive oversold conditions recorded by the Bitcoin exchange market. But, BTC has continued to show stability in the $6,500 range since August 17, remaining in the $6,300 to $6,600 range for four consecutive days.
Bitcoin has tested the $6,000 support level three times in the past eight months but each time corrective rally was initiated, the price of Bitcoin almost immediately surged to resistance levels in the $7,000 and $8,000 region. This week’s corrective rally has seen BTC stabilizing in the mid-$6,000 range, unable to initiate large movements.
Given the low volume of BTC, it is likely that Bitcoin continues to observe the $6,300 to $6,400 range in the upcoming days, waiting for the market to play out. If the volume of BTC spikes up and the price of the dominant cryptocurrency increases to the higher end of $6,000, it will be possible to argue that the mid-$5,000 region was the bottom for the market.
Still, investors have shown a lack of confidence in high-risk and high-return trades, despite the stability in the price of BTC, suggesting that investors still remain cautious in the crypto market, relying on major stores of value like Bitcoin that tend to perform well in a highly volatile environment.
In the short-term, analysts expect positive developments in Japan and South Korea in regards to regulation and the creation of new policies could impact the crypto market and exchanges operating within it.
Featured image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 6:05 PM