Major Cryptocurrencies start the day down across the board this morning as holders contemplate a key breakout level with Bitcoin testing all time highs.
Bitcoin finds itself almost 8% off yesterdays’ highs, and the other big guns are following suit. Ethereum is 8.5% to the downside, Solana is trading 7% down and Cardano is 6% off. So what is causing this procrastination ? Are we about to see a mini sell-off, or are traders taking a breath before a big bump to the upside?
Bitcoin Testing New Levels, Pulling other coins with it
Overt the past 7 days, Bitcoin has twice tested the $68,500 range before retreating to the downside so the question remains, are we about to see a correction or is this a breath in the move which has seen more than 40% gains for the industry leading crypto over the past 3 months?
From a technical perspective, there seems to be an increasing support building around the key psychological level of $60,000. Supporters of Bitcoin seem reluctant to let this level go, with more buyers stepping in to push the cryptocurrency higher off each dip. There is definitely a reduction in some of the volatility that was previously seen in BTC, with the dips now less aggressive than seen in previous years but to lose $100 billion in market cap in a single day is still not a small move.
The rise over the past week or so has been in part due to inflation fears coming out of the US particularly. Key US CPI rates have reached levels year over year not seen for 3 decades which typically sees investors flocking to inflationary hedges. In the past this would have been gold being the largest net beneficiary but what we have seen is that whilst Gold has moved to the upside, the move in BTC seen over the same time period has been in excess of 200% that of the metal. Analysts remain bullish on the major cryptocurrencies long term, with price targets still being set in excess of $500,000 for the industry leader. So where does that leave us with this move to the down today?
Bitcoin added a pretty major update in ‘Taproot’ yesterday, with the market reacting as is often seen in equities markets following the mantra of “buy the rumour, sell the news”.
Aggressive Bitcoin bulls would tell you that this is an opportunity to buy the dip. Bitcoin bears would tell you this is going to pull back to the lower levels of support around $30,000. Which side of the tape you find yourself is likely going to indicate how you react to today’s move down with most conviction traders unbudged. The likeliest outcome in this writers’ eyes is for a continued period of consolidation/range trading between $50,000 to $70,000 before we see the next leg up to $100,000.
The other major cryptocurrencies and even certain altcoins will often find themselves being pulled by Bitcoin, regardless of some of their own fundamentals.
Bitcoin seems to be intent on testing this $100,000 level at some stage but when this happens and how the markets react to it will likely set the tone for where the next level of consolidation settles.