The cryptocurrency’s recent price tumble has people wondering whether it will rebound. The recent fall in Bitcoin’s price to $5769 per coin means the original cryptocurrency has now lost almost half its value since topping out at $15,000 in December 2017. While this price drop could be a sign that the bubble is bursting, there are several other factors that may play a role in the coin’s shaky footing.
The past few months haven’t been easy on Bitcoin. After reaching its all-time high of just under $20,000 in mid-December, the world’s largest cryptocurrency by market cap has been on a downward spiral, with the price reaching a low of $6,300 in mid-February. By early April, Bitcoin was trading for just under $10,000, but the digital currency has since climbed back to the $13,000 mark. While Bitcoin has had its ups and downs, there are still a few reasons why the cryptocurrency may be on shaky ground.
Bitcoin (BTC) is testing lower levels again after it failed to break through $60,000 resistance – and indicators suggest the decline is not over yet.
BTC/USD rebounded from the $55,000 level Monday night, hours after it reached a local high of nearly $59,000 in early trade.
With sellers still approaching the all-time highs of $64,500, the largest cryptocurrency still has a lot of work to do to break out of its current wide trading range.
BTC returns toexchanges
One metric that could soon cause problems for the bulls is the total BTC balance on crypto-currency exchanges.
Despite the general downward trend over the past year, localized fluctuations in supply – with traders returning coins to their exchange accounts for an eventual quick sale – reflect a more sales-oriented mentality.
This is not the case for all stock markets this week. According to surveillance source Bybt, 16,222 BTC have entered the Binance exchange, the world’s largest, in the past seven days. On the other hand, the institutional platform Coinbase Pro lost no less than 11,947 BTC, which is in line with the overall trend.
Binance is not alone though – Okex, Huobi, Bitfinex and Kraken have all seen their BTC balances rise in the past 24 hours.
As Cointelegraph reports, a familiar face from past mood swings returned this week: greed.
According to the Crypto Fear & Greed Index, which measures trader sentiment based on weighted factors, the appetite for a selloff increases even when price action is no longer positive.
On Tuesday, the index gave the crypto-currency market an overall score of 68/100, matching greed as an overall sentiment factor.
Crypto Fear & Greed Index. Source: Alternative.me
This is still below the mid-90s peak reached earlier this year – a level that almost guarantees a sell-off – but the volatility ensures that the index won’t stay in the same zone for long. Greed can turn into extreme greed or extreme fear within days, or even faster.
The 27th. In April, for example, the index was only 27/100.
Dogecoin increases pressure altcoins on bitcoin
Finally, the most important factor related to bitcoin’s troubles this week: Altcoins.
First, it was Ether (ETH) that led the pack and surpassed bitcoin by surpassing $3,000 to reach all-time highs on Monday.
However, Dogecoin (DOGE) is now leaving the rest in the dust, returning to over $0.47 after being integrated into the popular eToro trading platform.
The DOGE/USD exchange rate is up 72% this week against 3% bitcoin at the time of writing.
Line chart BTC/USD vs DOGE/USD. Source: View of the shop
While altcoin is making periodic spikes, more and more analysts say a long-term trend is emerging before bitcoin can regain lost time and market dominance.
According to Cointelegraph, one indicator even suggests that the global altcoin market could grow by more than 27,000% by early 2022.
The next 2-3 months are going to be epic for alt-coins, a popular trader on Twitter known as Johnny has caught his followers predicting a short-term price target of $5,000 for Ethereum.
Bitcoin’s market share currently stands at 46.3% and continues to decline thanks to the influx of altcoins.
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