Over the past 72 hours, the cryptocurrency market experienced one of its wildest fluctuations in recent years, triggered by the sudden increase in the Bitcoin price.
The unforeseen decline in the value of Tether (USDT), a stablecoin backed by the US dollar on a 1:1 ratio, led premiums on major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) to materialize, briefly pushing the price of BTC to $7,700.
In actuality, the price of BTC on fiat-to-cryptocurrency exchanges such as Coinbase and Bitstamp did not exceed $6,700. Still, the short-term recovery of BTC from $6,150 to $6,450 supported by a rise in daily trading volume from $3.2 billion to $4 billion is considered a positive market development for the mid-term.
Bitcoin is Ready to Rally
The cryptocurrency market is not quite ready to initiate a strong short-term rally as seen in February and April during which the price of BTC surged from $6,000 to $8,000 within a span of minutes.
But, as technical analyst Crypto Monk emphasized, the weekly chart of BTC seen below has demonstrated a bottom-like trend over the past three months.
Analysts are optimistic in the outlook of BTC throughout the months to come because the dominant cryptocurrency has shown a level of stability it has not demonstrated since June 2017. Since August 9, BTC has defended the $6,000 support level and remained stable in the mid-$6,000 region.
Generally, technical cryptocurrency analysts have echoed a similar sentiment regarding the short-term trend of BTC; if Bitcoin price fails to maintain momentum above the $6,400 to $6,500 range with sufficient volume, then the market will become bear biased once again.
However, if BTC breaks out of the $6,500 mark quite comfortably and test the $6,800 resistance level, given that it already has temporarily broken out of a long-term descending trendline dating back go January, a trend reversal by the year’s end can be in play.
The daily trading volume of BTC, which has been an accurate indicator of the trend of the crypto market, has slightly declined from $4.5 billion to $4 billion in the past 24 hours. The volume of the crypto market also fell from $15 billion to $12 billion, suggesting that traders are holding back high risk, high return trades until BTC confirms a positive short-term movement.