Bitcoin Price Defends $6,000 as Crypto Market Cap Returns Above $200 Billion
Bitcoin rebounded sharply on Wednesday after a bear market breakdown dragged prices to within $100 of yearly lows. Although the technical indicators have improved, significant downside risks remain.
Bitcoin’s price was up 4.6% on Bitfinex to trade at $6,483. The leading digital currency reached a session high of $6,483, having recovered more than 8% from Monday’s swing low. Bitcoin’s 24-hour trade volumes averaged $4.6 billion on Wednesday.
The $6,000 price point has emerged as an important support level for bitcoin. As Hacked previously reported, this level is not only psychologically significant, it represents more or less the break-even rate for miners.
The monthly technical chart shows improving conditions in the bitcoin price, though this should be taken with a grain of salt given the market’s extreme moves as of late.
At current levels, bitcoin has a total market capitalization of $109.8 billion, which represents 53.6% of the total cryptocurrency market.
Altcoins and tokens collectively rose by $8 billion on Wednesday to reach a total value of $94.4 billion, according to CoinMarketCap. The value of all digital assets was $204.6 billion.
The Market’s Next Move
Although predicting bitcoin’s next move is notoriously difficult, a successful defense of the $6,000 floor is an important step in facilitating the next rally. That the yearly low ($5,755) wasn’t breached during the latest downtrend suggests the bulls may be running out of steam.
That said, bitcoin’s dominance rate reveals structural weakness in the cryptocurrency market, not to mention damaged investor psychology. As Hacked reported Tuesday, cash-out from the ICO boom appears to be largely responsible for the latest reversal, a sign that investors were losing confidence in riskier assets. This is further corroborated by Ethereum’s dramatic selloff over the past seven days. The so-called developer’s cryptocurrency has been responsible for three-quarters of initial coin offerings.
According to BitMEX CEO Arthur Hayes, investors shouldn’t expect a large price recovery at this stage given the general lack of momentum, volume and stability in the market. Trading volumes – a key proxy for demand in the cryptocurrency market – averaged $13.4 billion on Wednesday, based on latest available data.
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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