Bitcoin (BTC) Could Test $3,200 and Everything Would Be Fine
Everyone did their best impression of Chicken Little on Monday when Bitcoin (BTC) took a nosedive from $3,625 to $3,425. However, a look at Bitcoin’s chart suggests the largest cryptocurrency could very well test support at $3,200 and everything would be just fine.
Taking a step back and looking at the 3-month chart for BTC/USD on Coinbase reveals that the bounce we’ve seen since the market bottomed on December 15 could complete a full retrace. This means that BTC could again test the year lows just below $3,200, where bulls would likely look to take a stand. However, selling pressure in the latest sell-off looks to be very weak, as 24-hour volumes barely topped $4 billion.
Despite what Mark Dow might have tweeted on Monday, it doesn’t look like volatility got too far out of hand as the breakdown was not sustained and Bitcoin is currently trading slightly positive over the last 24 hours. It’s important to note that most analysts and pundits have Bitcoin breaching $3,000 with price targets as low as $1,260, meaning that the short-side trade is becoming fairly crowded at this point in the bear cycle.
Intriguingly, while Bitcoin is currently trading near its lows, the AltDex 100 Index (ALT100), a benchmark index for the top-100 cryptocurrencies and tokens, is still roughly 11.5% above its December 15 low.
This ultimately indicates that altcoins have outperformed Bitcoin over the last month and a half. This data is confirmed by the fact that Bitcoin’s market dominance has dropped from over 55% to around 53% over the same period.
With an ample amount of exciting developments occurring around various altcoins, it’s not out of the question that Bitcoin could take a back seat in the next major rally. However, it’s important for investors to actively monitor the altcoin market to determine if any such divergence is taking place, as most altcoins have been highly correlated to Bitcoin’s price.
Photo: Marco Verch / Flickr
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.