Altcoins rally while Bitcoin bulls are thwarted by resistance at $34K
A handful of altcoins posted double-digit gains while Bitcoin’s relief rally was halted by resistance at $34,000.
Bitcoin’s (BTC) tumble below $30,000 was short-lived as the top cryptocurrency found a new wave of support, including a $10 million ‘buy the dip’ moment from MicroStrategy.
Data from Cointelegraph Markets and TradingView shows the strong inflows have helped lift BTC 4.92% to a daily high at $33,866.
As the prospect of the Biden administration passing massive stimulus packages to help get the United States economy going again, conversations about Bitcoin becoming a reserve currency are beginning to pop up again.
Although Bitcoin’s recent volatility has some analysts saying BTC is a cyclical asset rather than a hedge, the price recent movements have caught the eye of retail investors who have shown a renewed interest in cryptocurrencies in general.
Even the Bank of International Settlements has acknowledged that digital currencies may have use and the organization has outlined plans to roll out a variety of central bank digital currency trials this year.
Now that the Bitcoin fear index has flipped from “Extreme Greed” to “Fear,” some investors appear to be taking Warren Buffet’s advice of “buying when there is blood on the streets”.
Institutional investors are wary of future regulation
According to Chad Steinglass, head of trading at CrossTower, Bitcoin’s correction may have initially been triggered by critical comments fromU.S. Treasury Secretary Janet Yellen.
Prior to Yellen’s comments, Bitcoin was experiencing a “post-correction consolidation” and was “rangebound between $34,000 and $38,000” with traders “waiting to see which side of the range would be challenged or broken.”
Steinglass further explaind that Bitcoin’s next steps will be determined by the actions of institutional investors. He said:
“$31,000 was a pocket of strong support, so at least not everyone is selling. We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”
Altcoins bounce back
Many of the top altcoins also recovered nicely from this week’s correction. Polkadot (DOT) rallied 7.09% to a daily high at $18, while Chainlink (LINK) posted a double-digit gain and topped out at $22.31. Tezos (XTZ) has also seen a surge in interest which boosted the altcoin by 15% to $3.36.
The overall cryptocurrency market cap now stands at $949.8 billion and Bitcoin’s dominance rate is 64.4%.