Cryptocurrency Rally Stalls as Bitcoin Price Hits Resistance
Cryptocurrency prices were down across the board on Saturday, with bitcoin – the market’s biggest bellwether – stalling near a key resistance.
After reaching a high of $225.6 billion on Friday, the total cryptocurrency market capitalization has fallen back to $211.3 billion, according to CoinMarketCap. The broad pullback was accompanied by only a minor dip in trading volumes, a sign that profit-taking was a factor.
Six of the top-ten coins (excluding Tether) had reported declines at the start of the weekend. Bitcoin was down 3.5% to trade at $6,355.00 on Bitfinex. The leading digital currency reached a high of $6,619, which is just shy of the most recent peak. Bitcoin’s market still exhibits strong trading volumes, with 24-hour turnover at $4.3 billion.
Among the major altcoins, Ethereum, Stellar Lumens, Litecoin and Cardano had each declined between 1.2% and 3.5%. On the opposite side of the spectrum, XRP, bitcoin cash and EOS had reported gains of at least 1.6%.
Bitcoin’s dominance rate, or the percentage of the total cryptocurrency market cap held in BTC, was 52%. Bitcoin accounted for as much as 54.5% of the total market capitalization earlier this week.
The recent meltdown in cryptocurrencies originated 11 days ago when the U.S. Securities and Exchange Commission (SEC) announced it would delay a ruling on a highly anticipated bitcoin exchange-traded fund (ETF). However, analysts have struggled to explain the extent of the selloff – namely, the $35 billion plunge between Aug. 10-13.
According to eToro analyst and Hacked contributor Mati Greenspan, a surging U.S. dollar may have contributed to the decline. As CCN reports, the cryptocurrency market’s movements this week have been highly correlated with fluctuations in emerging-market currencies. Emerging-market exchange rates have been rocked by contagion fears emanating from Turkey’s political crisis, which have boosted demand for the U.S. dollar. As Hacked reported Friday, the U.S. dollar index recent hit more than one-year highs.
“As the United States moves to tighten its economy and avoid strong inflation, they’re taking action that is strengthening the Dollar. Because the US Dollar is the global reserve currency, many smaller economies rely heavily on a stable exchange rate with the greenback,” Greenspan wrote. “So too, as the Dollar is being seen as a stable store of value at the moment, there really isn’t much incentive for people to store their money in digital assets.”
Bitcoin is generally viewed as a non-correlated asset, which means it enjoys unique price independence when comparted with traditional markets. Correlation, when it does occur, is often driven by the erroneous belief that bitcoin is associated with the broader market. This was observed earlier this year when bitcoin seemingly fell in lockstep with the U.S. stock market.
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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