Market Wrap: Bitcoin Falls to $18.1K as Correlation to Ether Picks Up

Wednesday 02 December 2020, 7:58 AM AEST - 1 month ago

CoinDesk 20 Bitcoin Price Index

The price of bitcoin took a bit of a dip, though overall market sentiment remains bullish. Ethers correlation to bitcoin is going up despite differences in value propositions.

btcdec1Bitcoin trading on Bitstamp since Nov. 28.

The price of bitcoin was able to hit as high as $19,920, according to CoinDesk 20 data, before momentum stalled. Traders began hitting the sell button, taking the price to as low as $18,171 before it recovered. It was at $19,123.70 as of press time.

Katie Stockton, a technical analyst for Fairlead Strategies, sees $19,511 as a resistance level, a price point the worlds oldest cryptocurrency can break through in this time of highly bullish sentiment. An eventual breakout appears likely from a momentum perspective, she said, noting that $19,511 is not a strong resistance level – $20,000 is a psychological hurdle, much like Dow 30,000.

A positive performance out of stocks often means bitcoins price will trend upward, but Tuesdays sideways activity again reiterates how volatile the crypto markets can be. In turn, that raises questions about a major narrative regarding bitcoins role.

Expect additional short-term volatility, although intermediate- and long-term momentum are strongly positive, Fairleads Stockton said. Thus, when looking at bitcoins volatility versus popular traditional assets, the store of value thesis may not be as strong as many believe as volatility is trending up versus other investments.

Bitcoin versus S&P 500, gold and bonds in 2020.Bitcoin versus S&P 500, gold and bonds in 2020.

However, the narrative that bitcoin serves an important purpose in uncertain times still holds for a large swath of the market.

It is being used as a hedge against inflation that will come from global monetary easing as a result of COVID-19, said Midori Kanemitsu, a market analyst at cryptocurrency exchange bitFlyer.

Some of this increased volatility may simply be because investors are participating in profit-taking at these lofty levels, said Andrew Tu, an executive for quant trading firm Efficient Frontier. Currentl ...

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