Bitcoin prices tumbled Wednesday as traders decided to secure short-term gains.
The flagship cryptocurrency corrected lower by as much as 3.35 percent after establishing a record high above $52,000 in the previous daily session. At its intraday low, it was trading for $50,875.
Bulls stepped in to control the downside move and managed to prompt a small rebound upward.
That further an underlying bullish bias in the market, apprehensively driven by a flurry of latest optimistic updates recently, including Tesla’s $1.5 billion investment in Bitcoin, as well as MicroStrategy’s plans to raise $600 million via debt so as to use the proceeds to purchase more bitcoins.
The Nasdaq-listed firm already holds more than 71,000 BTC worth more than $3.5 billion per the current exchange rates.
Altcoins Rally against Bitcoin
The correction in the Bitcoin market also appeared as traders’ focus shifted to the altcoin market.
In the past 24 hours, many bitcoin rivals, including Ethereum and Binance Coin, rallied to log their fresh record highs. Their value rose wildly in both the US dollar- and bitcoin-enabled markets, suggesting that many traders exchanged their BTC holdings to seek opportunities in the altcoin space.
Historically, the top bitcoin rivals tend to surge higher after BTC/USD post incredible gains. Rekt Capital, an independent market analyst, recalled the rally in January 2018 that came almost a month after Bitcoin established its then-record high of $20,000.
“Altcoin Market Cap finally revisited the 2017 highs and broke them,” the pseudonymous entity noted. “It is now in Discovery mode […] If history continues to repeat, the altcoin Market Cap will soon turn the 2017 highs into an area of support. [It] will then springboard into an exponential uptrend that will see [it] grow by +1000’s of [percent].”
A rally in the altcoin sector would mean either a pause in Bitcoin’s uptrend or a much-needed correction from its technically overbought levels. Nonetheless, many analysts expect that the flagship digital asset would keep on trending higher against a supportive macroeconomic backdrop.
For instance…
…the Federal Reserve said in the minutes of its January meeting that it would continue buying $120 billion worth of government and corporate bonds every month while keeping interest rates near zero.
The US central bank believes that the US economic recovery would speed-up in 2021 but expects to continue its dovish plans until the labor market’s conditions improve and an inflation target of 2 percent is achieved.
Bitcoin rose by more than 1,100 percent from its last year’s mid-March nadir of $3,858 against a similar macroeconomic backdrop. Analysts note that higher inflation would force corporates to dump their cash reserves for safe-haven assets like gold and bitcoin.
The adoption curve makes them see Bitcoin at a six-figure valuation in 2021.
Yashu Gola is a Mumbai-based finance journalist. He is profoundly active in the bitcoin space since 2014 – and has contributed to several cryptocurrency media outlets, including CoinChapter, NewsBTC, FxDailyReport, Bitcoinist, and CCN. Academically, Yashu holds a bachelor's in information technology, with majors in data structures and C++ programming language. He has also won the 'Atulya Award' for his efforts towards raising $100,000 for an India-based farming project.
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