Bitcoin Price Eyes Recovery After Successful Defense of Key Support
After hitting its lowest level of the year, bitcoin is beginning to regain composure after prices successfully defended a key support level on Monday. With trade volumes returning to normal and Tether minting an additional 250 million USDT tokens, the crypto-market’s bottoming process could be coming to an end.
BTC/USD Price Levels
Bitcoin’s recent flash crash has given rise to a broad market-wide consolidation as all major cryptocurrencies rebounded from weekend lows. Bitcoin’s price fluctuations have steadied over the past 24 hours, with values hovering between $6,200 and $6,300. At the time of writing, the coin was priced at $6,271, having rebounded more than $600 from Sunday’s swing low. On Monday, it reached a daily high of $6,333.82.
The successful defense of the psychologically important $6,000 price point suggests further gains are possible now that new capital is entering the market. Crypto market trade volumes have spiked 50% week-on-week, according to CoinMarketCap.
The Relative Strength Index (RSI) provides another bullish indicator for bitcoin. The current reading of 59 suggests momentum is returning after a brief bout with oversold conditions on Sunday.
Cryptocurrencies as a whole are valued at $256 billion, having rebounded $20 billion from Sunday’s bear-market lows.
Tether Issues More Tokens
Tether has reportedly minted an additional 250 million units of its controversial USDT token on Monday, a sign that demand is slowly returning to the crypto-sphere after many months of declining interest.
The increase, which was confirmed by CCN, marks Tether’s largest token issuance since May 18, when a similar amount of USDT currency was minted.
Tether’s stablecoin is supposedly pegged to the U.S. dollar at a rate of one-to-one, which means any new token that is created must be backed by a reciprocal amount of fiat currency. Based on Tether’s standard, customer deposits of roughly $250 million would be needed to create 250 USDT tokens.
If we use the last issuance as an indicator of future price behavior, then we can reasonably assume that bitcoin’s value will increase as a result of the new coins. Bitcoin appreciate by $400 over three days following the May 18 token issuance.
USDT has been in the spotlight for all the wrong reasons amid speculation that Tether has been artificially inflating token supplies to prop up bitcoin and other virtual currencies. Tether has been subpoenaed by U.S. regulators after it came to light that the company was run by the same executives heading Bitfinex, one of the world’s largest digital currency exchanges.
Back in January, a website by the name of tetherreport.com claimed that Tether’s USDT supplies were responsible for nearly half of bitcoin’s 2017 price gains. The report’s authors remain anonymous.
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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