Bitcoin Rallied from Year-End Support to Save the 2019 Uptrend
Bitcoin’s rally in January from $7,200 to $9,300 was a sure sign that the market would attempt to cross the psychological $10,000 level. Big round numbers are always watched closely by traders and can be areas of volatility between buyers and sellers. Despite moving higher in February to a high around $10,500, BTC was unable to consistently trade above the $10k mark and has since pulled back to $8,8000.
The largest cryptocurrency in the world by market value had shown signs earlier in the year that it was tracking gold as a safe haven in times of financial market woes but the latest sell-off in stocks due to the spread of the Coronavirus has seen a pullback in riskier assets and cryptocurrencies have also been affected.
The drop lower in BTC may only be a temporary correction as traders are eagerly awaiting the coming “halving” event, which is scheduled for May this year. Halving is the term given to an automatic event, programmed into cryptocurrencies, where the rewards for mining a block are cut by half. This makes it less valuable to mine the coins and can lead to reduced mining activity, and supply of coins. With less supply available, assets in all markets are seen as more valuable. It is unclear at this point what effect Bitcoin’s halving will have, but analysts are optimistic.
Litecoin’s Short-Term Activity Likely to Track BTC Into the Halving
Litecoin’s price action was similar to that of BTC in February, after a strong move from $40.00 to a close near $70.00. LTC then saw prices rally to levels over $80.00. Like BTC, LTC has now pulled back to trade at $61.00.
Price has followed the overall market in February due to a lack of announcements from the Litecoin developers and this will likely continue to be the case over the next two months as the market awaits Bitcoin’s lead.
Billionaire crypto enthusiast Mike Novogratz told reporters ten days ago that he saw BTC going to new highs by the end of the year. His comments were driven by the continued efforts of global central banks to stimulate their struggling economies, which has fuelled the rally in stock markets and alternative assets.
Bitcoin’s rally has fizzled out at the strong resistance level of $10,000 and we’re likely to see a pause in activity as traders await the coin’s halving in May. It is likely that LTC will follow the direction of BTC until the effects of that event become clearer.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.