Few seem to be bothered by bitcoin’s volatility on Tuesday, when the number one cryptocurrency by market cap fell to the $ 26,000 level after its first trades above $ 28,000 on Sunday. Many market participants are convinced that institutional and retail investors will raise the price of bitcoin after the holiday lull.
- Bitcoin (BTC) is trading around $ 26,937.67 starting at 21:00 UTC (16:00 ET). Gaining 0.37% in the last 24 hours.
- Bitcoin 24-hour range: $ 25,875.05- $ 27,117.95 (CoinDesk 20)
- BTC between its 10 hour and 50 hour averages on the hourly chart, a side signal for market technicians.
With institutional trading activity limited during the final days of 2020, traders and analysts told CoinDesk that the recent price movement has been largely driven by retail investors.
“It is quite unusual for the entire past week to be so, given the holiday season. Usually, during the holiday season, there is a liquidity crisis, ”Mable Jiang, director of crypto hedge fund Multicoin Capital, told CoinDesk. “The heat was partially driven by the recent rise in bitcoin and the resurgence of retail interest in the market, at least in China.”
Jiang noticed some patterns in recent commercial activity among retail investors. Some are rolling alternative currencies in bitcoin and ether. Others are looking for currencies that could potentially outperform bitcoin in the coming months.
In TradeBlock’s weekly market commentary on December 28, the cryptocurrency analytics firm wrote that the recent highs for bitcoin and ether were driven by XRP outflow.
“The only two digital currencies [Securities and Exchange Commission] definitely declared that bonds are not bitcoin ”and ether, said TradeBlock. “As regulatory uncertainty increased in the alternative currency market following SEC action [against Ripple Labs, claiming it was trading an illegal security, XRP], traders took the opportunity to accumulate more regulatory assets, bitcoin and ether, while maintaining exposure to cryptography amid one of the strongest bullish runs ever recorded. “
Read More: Coinbase to suspend XRP trading after SEC lawsuit against Ripple
However, while the price of bitcoin has dropped to less than $ 26,000 in the past 24 hours, many market participants appear to be optimistic about the coming weeks and months, especially after the return on investment activity after the holiday.
“If the expected wave of retail flows materializes, I would expect to see bitcoin charging more than $ 30,000 when we enter the new year,” said Denis Vinokourov, head of research at London-based Brokerage Bequant.
Read More: CME leads Bitcoin Futures rankings amid growing institutional interest
Last month’s price move towards the previous $ 20,000 resistance level is a compelling case to support such optimism, according to Chris Thomas, head of digital assets at Swissquote Bank. Although small sales occurred three times during the hike (on November 25, December 1 and December 5), prices rebounded quickly as strong demand for bitcoin exceeded the amount of bitcoin sold.
Read More: Whale sightings become scarce, removing the downward pressure on Bitcoin: analyst
“Since then, bears have been reluctant to sell much more, as they are likely to be able to sell at higher levels in a few weeks or months,” said Thomas. “I suspect that we will see a $ 26,500 to $ 27,500 range in the early days of the New Year. From January 4 onwards, we should see institutional positions returning to the market. “
Read More: Grayscale has $ 19 billion in crypto assets under management, up from $ 16.4 billion last week
Lower Ether in active retail trade activities
The second largest cryptocurrency by market capitalization, ether (ETH), fell on Tuesday, trading around $ 728.59 and fell 0.47% in 24 hours from 21:00 UTC (4:00 pm ET).
Similar to bitcoin, the market’s sentiment regarding ether’s performance has also remained positive, despite price volatility.
Read More: Ether Trades over $ 700 for the first time since 2018
“Currently, [ether’s] turnover is more than 15% higher than average, further proof that ether is on the rise, ”said Guy Hirsch, director of eToro in the United States. “We expect the second largest crypto asset to continue to grow in the new year, and possibly exceed $ 800 sometime during the first half of the year.”
If they are not already doing so, institutional participants may also start looking at ether, especially after the Chicago Mercantile Exchange (CME) said it will launch an ether futures contract in February 2021. That may bode well for the performance of ether over bitcoin, according to some analysts.
Read More: Institutions will start buying Ether in 2021, says Messari Analyst
“The imminent introduction of CME Group’s ETH futures should encourage further adoption, especially among financial institutions looking to diversify digital assets with another regulated product they are comfortable with,” said Vinokourov. “This, combined with [decentralized finance’s] continuous increase, should help ETH to overcome BTC in the near future. “
Retailers also seem more interested in ether, as the total blocked value (TVL) on DeFi, as provided by analytics website DeFi Pulse, reached $ 14.47 billion on Tuesday.
“On the market creation side [on DeFi], we see very uniform flows, with a little more [stablecoins] ether than the opposite, which I believe indicates that there are still a lot of retail investors trying to get into the wagon, ”said Peter Chan, a broker at the Hong Kong-based crypto company OneBit Quant, which is focusing on the e-commerce. DeFi.
Other markets
The digital assets at CoinDesk 20 are mostly in red on Tuesday. Notable winner from 21:00 UTC (16:00 ET):
- The oil rose 0.76 %%. Price per barrel of West Texas Intermediate crude: $ 47.98.
- Gold was green at 0.31% and $ 1,879.03 so far.
- Yield on 10-year US Treasury bonds fell on Tuesday, falling to 0.931.
