Cryptocurrency Market Continues Higher Following Brief Reversal; Bitcoin Price Approaches $6,800
After a brief pullback, cryptocurrency prices were back on the offensive Wednesday as bitcoin eyed a major psychological inflection point that could tip the scale back in favor of the bulls.
Crypto Market Update
Wednesday saw a quick turnaround for cryptocurrency prices, as the total recovered nearly $15 billion in the span of about 14 hours.
The total market capitalization of all cryptocurrencies bottomed at $261.9 billion early Tuesday. The market later rebounded to $277 billion, the highest in almost two weeks.
At the height of the rally, the bitcoin price reached $6,771.92, its best levels since June 21. BTC/USD is now trading just above $6,700 for a gain of 1.8%. Bullish momentum is returning after waning briefly over the past 24 hours. Bitcoin’s bulls are now eyeing $6,800 and $7,000 as the next major resistance tests.
Among the top-ten coins in circulation, IOTA is the biggest gainer at 4.8%. MIOTA currency was last seen trading at $1.22.
Ethereum prices rose 1.7% to $476, bitcoin cash jumped 2.5% to $787 and Ripple XRP was virtually unchanged at $0.497 (all figures according to CoinMarketCap).
Twenty four-hour trading volumes reached $15.2 billion, one of the highest in the last two weeks.
Bitcoin in the Driver’s Seat
Bitcoin’s dominance of the cryptocurrency market is well documented, but its share of the overall pie (and influence on other coins) has quickly dwindled since early 2017. That being said, the largest cryptocurrency by market capitalization and trading volumes is steering the ship following a two-month correction in prices.
Bitcoin owns roughly 42% of the overall market, a figure that has risen steadily since prices tanked last month. Although this makes BTC the one to watch for investors hoping for a price reversal, it also makes the overall market more vulnerable to sudden and sometimes inexplicable moves.
Hacked reported last month that bitcoin’s volatility fell to its lowest level in 12 months. Shortly thereafter, prices cratered 12% to fresh 2018 lows. As recent action has demonstrated, volatility always lurks in bitcoin’s shadow.
Economists recently put forward the argument that bitcoin’s bear market was triggered by the introduction of futures trading in December. That position is not unlike the one posited by the Federal Reserve Bank of San Francisco, which argued back in May that the ability to short bitcoin through the futures market was the principal driver for the half-year correction.
While compelling, this argument does not factor declining retail interest in cryptocurrencies since the market peaked earlier this year. New buyers are rarer than they were just six months ago – a fact that is further corroborated by weaker exchange volumes and declining search results.
The presence of bitcoin whales also cannot be ruled out when analyzing volatility. A study released last month showed roughly one-third of the bitcoin market was controlled by the so-called whales, a term that describes people with a much larger than ordinary stake in the asset.
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.
Featured image courtesy of Shutterstock.