Perhaps Bitcoin may become digital gold but forget about the altcoins
August 16, 2019 @ 14:38 +03:00
Bitcoin’s consistent failure to take several round levels along the path of growth, and then the sideways trend turned into a sell-off. Sellers pushed the Bitcoin down to $9,700, where they saw an increase in purchases from bulls returning the benchmark cryptocurrency back above the $10K threshold. By the end of the week, the process was no longer a tug-of-war process, but a real fight.
The frequently quoted Crypto Fear & Greed Index is now in the “Fear” zone, reflecting the market decline and proximity to lows. However, if the market is at lows or near, it is very good news for Bitcoin investors.
The decline of the markets at the beginning of the week and the growth of Bitcoin renew a wave of discussions that the collapse of commodity and stock markets is spurring demand for cryptocurrencies. Especially when this is happening due to the worsening political situation (as in Hong Kong) or a sharp weakening of national currencies everywhere in the EM.
A global turmoil is expected to increase demand for Bitcoin along with traditional safe assets such as gold. Later on, the statistics will allow answering this question more accurately: within the framework of recent events, there were both confirmation and refusals of the correlation (the growth of Bitcoin – the fall of the market and vice versa).
Altcoins are still the main losers in the battle of bulls and bears for bitcoin. Dynamics around Bitcoin can be considered as clear evidence of the vitality of the asset. The altcoin market is simply destroyed by successive sales. Alternative cryptocurrencies still have supporters, and this can be seen in the decline over the last 7 days of Bitcoin dominance index by 1 percentage point, but the number of such investors will decrease in the future if the negative price dynamics will persist.
With each new sale-off, even the leading coins are declining lower and lower, while the main forces of crypto enthusiasts seem to be going to support the benchmark currency. Ethereum (ETH) has lost 16% in the last 7 days, XRP has lost 13% in the same period, Bitcoin Cash (BCH) declined by 7%, Litecoin (LTC) has lost 17%, ZCash (ZEC) has fallen almost 20%.
In general, there is a change in the structure of the market cryptocurrency: the halo of breakthrough new technology has disappeared, and the market sentiment is now more controlled by fundamental and technical analysis.
Crypto market participants are growing up, and if in December 2017 the news about the launch of futures contracts contributed to the growth of BTC to historical highs, now everyone understands that professional investors will not hesitate to collapse the entire market if it will be profitable. Although the market sentiment is bullish in general, they still understand that the market is in the hands of big businesses, and this should be taken into account.
The FxPro Analyst Team