Week in Review: Cryptocurrency Rally Short-Lived as Bitcoin Price Tests Critical Support
The cryptocurrency market continued lower over the past seven days, as bitcoin and the major altcoins failed to nurture a modest rally attempt that, last week, seemed to indicate the end of a downtrend. In bitcoin’s defense, the largest cryptocurrency by market cap has successfully maintained the $6,000 support level for two weeks running, offering compelling evidence that a bullish reversal is still in the cards.
Equity markets were rattled midweek by an escalation of trade-war rhetoric by the Trump administration, which announced plans to tax an additional $200 billion in Chinese goods. Although China has vowed to respond, Beijing’s massive surplus with the United States will limit its ability to match Washington’s tariffs dollar for dollar.
Nevertheless, trade-war risks failed to deter U.S. equity markets as earnings optimism, positive economic data and developments on the corporate merger front lifted the benchmark indexes.
Cryptocurrencies Suffer Early-Week Selloff
The combined value of digital currencies fell by more than $20 billion Tuesday, a stark reversal from the weekend, when the market reached its highest level in three weeks. There was no immediate catalyst for the reversal, which suggests that a combination of technical trading and profit-taking played a role.
Bitcoin reached a high near $6,900 last Sunday before reversing all the way back down to around $6,150 four days later, according to CoinMarketCap. Despite the reversal, the bitcoin price has successfully defended $6,000 – a critical support that represents the break-even point for miners. Bitcoin’s continued defense of this level suggests that the bulls are rallying to keep prices from falling any further.
EOS ran into fresh controversy this week after its New York block producer shed light on the network’s RAM complications.
In a Sunday tweet, EOS New York, the network’s largest block producer, said the following:
“Some Block Producers crashed when RAM usage on EOS exceeded 1GB tonight. Either they only had 1GB or they did not configure their node to properly set it at 64GB. This is a violation of the regproducer agreement. EOS New York produced on schedule. We are still confirming details.”
EOS New York later clarified the issue: “Upon further investigation we learned that this is less a regproducer violation and more a failure to adjust a default configuration on a plugin in their producing node.”
New Crypto Bills from South Korea Expected
At least four South Korean lawmakers are looking to present new cryptocurrency legislation to the National Assembly this month in an effort to fast-track regulation of the digital asset class.
As Hacked reported last month, the proposed bills seek to regulate digital currency exchanges and beef up anti-money laundering and know-your-customer guidelines. According to the Korea Times, the new bills may also provide reprieve to initial coin offerings (ICOs), a segment of the market that was banned last fall.
It is not clear whether the bills will be signed into law during the National Assembly session, which runs from July 13 to 26.
Nasdaq Notches New Record High
Wall Street’s major indexes overcame a volatile Wednesday session to finish firmly higher for the week. Technology shares continued to outperform the broader market, sending the Nasdaq Composite Index to fresh records.
On Friday, a trio of U.S. banks reported second-quarter earnings. J.P. Morgan Chase & Co (JPM) and Citigroup Inc. (C) posted earnings that were higher than expected, while Wells Fargo & Co (WFC) saw its profits sink.
The trio of bank earnings traditionally mark the unofficial start to Wall Street’s corporate earnings season. Analysts are forecasting per-share earnings growth of 20% for S&P 500 companies when measured year-over-year.
The Week Ahead
Crypto traders are in need of direction following the latest reversal. While predicting the future is always a challenge, market participants can expect subdued markets insofar as trading volumes remain thin. As Hacked previously reported, bitcoin typically requires 24-hour trade volumes of at least $4 billion to generate a sustained rally.
Hacked will be on high alert for regulatory developments in South Korea and India over the next seven days. South Korea’s National Assembly session continues next week. In India, a special cryptocurrency panel is expected to present government regulators with a draft bill any day now.
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.