Over the past 24 hours, Bitcoin has shown high volatility. The first cryptocurrency bounced to a local high of $7,900, slipped to $7,000 amid the European session, and then faced a massive dip, collapsing to $5,600. It was like a flash crash on the background of algorithmic trading. So, at the moment, we are witnessing the outcome of institutional investors’ participation in the pricing of cryptocurrencies. The total capitalization of coins collapsed by $55 billion over the past 25 hours.
The RSI index found itself in the oversold zone below 30 for the first time since December 17, 2019. Last time it was there before the rally started, but now it isn’t easy to predict such an outcome. The Crypto Fear & Greed Index is in the zone of “extreme fear”, fully reflecting what is happening in the market. Alternative cryptocurrencies are showing an even more significant decline. The top 10 cryptocurrencies are falling by 30-36%. Against this background, the Bitcoin Dominance Index has risen by 1.83 percentage points to 65.9% over the last 24 hours.
Bitcoin was conceived as a counterbalance to the traditional financial system. Gaining on this idea, the collapse of the stock market, policy easing, sharp fluctuations in national currencies, destruction of supply chains and other problems should lead to increased demand for Bitcoin.
It is likely that over the next few months, we may see what status Bitcoin has in the market — the approaching of halving overshadowed by coronavirus and turbulence in the markets. However, one should not write off purely crypto events that may also have an impact on the sector’s prospects. Now the question is, can the leading digital currency surprise market participants with something new?
The FxPro Analyst Team