Crypto markets suffered over the weekend, especially with renewed selling on Sunday, as Bitcoin approached a long-term support that, if broken, threatens to expose new lows. Other cryptocurrencies also slipped alongside Bitcoin, as usual, as traders piled into dollar-backed stablecoins like Tether and TrustUSD.
Over the weekend, Bitcoin’s price was sitting at around $3,500, an important support level for Bitcoin since early December 2018. We could attribute this weekend’s downfall, which started more or less during last Friday’s early morning in central Europe, to an increased downtrend in trading volumes.
Bitcoin’s trading volume, according to TradingView, rose about 40% during the weekend, going from close to $5 billion to well above $7 billion. This selling pressure took Bitcoin’s price from the $4,100-$4,000 range to the $3,500-$3,400 range.
Bitcoin now faces critical long-term support near $3,550, and a firm break below this level would likely lead to further unwinding back down to $3,000. The leading digital currency bottomed just above $3,100 last month before regaining more than a third of its value.
Bitcoin is likely to experience heavy volatility in the short term as long-dormant crypto accounts become active once again. Over the past 30 days, dormant Bitcoin wallets have accounted for about 60% of the circulating supply, a strong sign that large holders were shifting assets to virtual exchanges. A similar influx preceded two major price swings in 2015 and 2017.
This means we could expect the sell-off to continue until public sentiment does a 180 degree turn or a black swan event takes place (like a financial crisis or economic recession).
Altcoins to the rescue?
Where Bitcoin goes, altcoins and tokens seem to follow. This gravitational pull has only strengthened during the bear market, eroding what many believed was a broad decoupling between Bitcoin and altcoins at the beginning of 2017.
While Tron fell by around 10%, as TRX drifted back toward the low $0.02 range, Ethereum dropped about 7% to $118. EOS dropped about 6% and Litecoin around 4%.
Other top-10 cryptocurrencies followed the downtrend path, making it quite obvious Bitcoin still dictates the market – it currently holds over 50% of all market capitalisation.
Up until the end of the year, I expect a renewed strength of fresh cash to come into the cryptocurrency market, taking some power away from Bitcoin.
What I’m unsure of is if this power-grab will be done through a massive marketing campaign around Security Token Offerings (STOs) or if some other cryptocurrency could make serious improvements and shift public perception and confidence. A couple of cryptocurrencies I would recommend reading about are Ethereum (due to the most recent update coming later in the week), Stellar (due to its amazing progress throughout last year, plus they did a nice marketing campaign during Websummit to promote XLM), and, of course, the highly anticipated Mimblewimble protocol, which I will discuss later during the week as well.
Let’s see what the week brings.
Safe trades!
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.