Bitcoin Price Charting Narrow Path as Altcoin Selloff Continues
Bitcoin’s price charted a narrow path Wednesday, as the broader cryptocurrency market headed for new yearly lows in the wake of yet another Ethereum nosedive.
Bitcoin fell 1% on Wednesday to $6,228 on Bitfinex, having touched an earlier low of $6,202.80. BTC traded as high as $6,307.80 over the 24-hour period, bringing its daily trading range to just $105.
BTC is down more than 12% over the past week but has demonstrated newfound stability following the successful defense of $6,000. Measures of momentum, such as the relative strength index (RSI), suggest bitcoin is oversold at the moment. This could generate renewed buying interest in the event that prices fall below $6,100. However, a sustained rally does not appear likely following last week’s rapid decline.
Bitcoin is presently capitalized at $108.3 billion with daily trading volumes hovering just below $4 billion, according to latest available data.
Bitcoin’s Dominance and Ether’s Decline
Bitcoin’s dominance rate, or the share of the cryptocurrency market cap held in BTC, rose to 57.9% on Wednesday, the highest since December. Bitcoin’s market share has risen by more than 18 percentage points over the past three months. Over the same period, Ethereum’s dominance rate plunged by 8 percentage points.
Ether hit a new low for the year on Wednesday amid signs that initial coin offerings (ICOs) were selling ETH at an ever increasing pace. The second-largest cryptocurrency by market cap plunged 10.5% to $173.
The sharp selloff of Ethereum dragged the overall cryptocurrency market to new lows for the year. The market capitalization of all coins bottomed near $186 billion overnight, according to CoinMarketCap.
Ethereum’s decline suggests ICO mania is beginning to subside. At the very least, it suggests that ETH was significantly inflated during last year’s ICO boom where hundreds of startups employed the ERC-20 protocol to launch their own virtual currency. ERC-20 tokens including Tron, VeChain and OmiseGo have plunged by at least 27% over the past seven days.
The cryptocurrency market tends to rise and fall on speculation despite what the underlying fundamentals have to say. From the perspective of regulation and adoption, the cryptocurrency market appears to be headed in the right direction. On Monday, Hacked reported that Citigroup, one of Wall Street’s biggest financial institutions, is planning to securitize bitcoin through a Digital Asset Receipt, which provides indirect exposure to the leading digital currency. Meanwhile, Goldman Sachs is also said to be developing “non-deliverable forwards” for digital assets that allow investors to access over-the-counter derivatives for bitcoin. Bank of New York Mellon Corporation, JPMorgan Chase & Co and Northern Trust Corporation have also expressed interest in bringing regulated cryptocurrency trading to institutional investors.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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