The past week has seen a great deal of pain for cryptocurrency investors as the entire market was in a huge funk. After reaching as low as $340 in market cap on March 11, it appears that a recovery may be underway, led of course by Bitcoin.
Bitcoin on the Move
March 11, saw the cryptocurrency markets recording a minor recovery after dipping below the $350 billion mark. Bitcoin fell as low as $8,320, and the price of Ethereum also fell to $637, more than halving its all-time high around the $1,400 level.
We can see here the double bottom formed by Bitcoin, with the second low coming on low volumes. While we did just get a sharp hourly move lower, it halted before reaching the new short term trendline, which is showing Bitcoin reaching new higher lows – a bullish sign.
Volatility remains however, with the daily trading volume of Tether over $2 billion. Many of the world’s cryptocurrency traders use Tether to hedge their crypto holdings against the U.S. dollar.
Even with this volatility it looks as if Bitcoin may have turned a corner and we will be watching the new trendline with interest. If it holds, we could see a recovery of Bitcoin above the $10,000 level, which would be a good signal for a new uptrend.
Let’s not forget the Bitcoin began 2017 around the $1,000 level after a dip at the end of 2016, but by the end of the year Bitcoin had nearly reached the $20,000 level. We remain better than 300% above the levels seen last March for Bitcoin, so things aren’t as bad as they may currently appear.
It is also important to consider the Mt. Gox factor in all of the recent selling. If reports are correct and selling by the Mt. Gox trustee, which has amounted to some $400 million in Bitcoin over the past three months, is now halted the market should be primed for a strong move higher.
With this large block of selling pressure removed from the market demand for Bitcoin can be properly expressed. Given the current trend coupled with a removal of Mt. Gox selling we could see Bitcoin return to levels last seen in early December.
As we’ve often seen, Bitcoin tends to outperform the alternative cryptocurrencies in volatile periods, and this has been the case recently, with Ethereum, Litecoin and other alt-coins dropping twice as much as Bitcoin. Were still seeing this underperformance, as most of the top ten coins remain slightly negative today, but other areas of the market are returning to positive performance. One standout today is the Steem Backed Dollar, which is currently up 11%.
While some alternative currencies will outperform Bitcoin as it recovers, we expect Bitcoin to lead this market higher in the short term, although alternative currencies are likely to pick up momentum as investors become increasingly confident over the recovery.