After rising 80% from the low on Black Thursday, March 13th, Bitcoin is taking a breather.
The bellwether of the crypto ecosystem has retraced to test support below $7,000, and little brother Bitcoin Cash has dropped after its network halving event.
Meanwhile, traders are turning their attention to surging altcoins like Chainlink and Tezos.
Will bitcoin realize its potential as an inflation hedge?
Bitcoin failed to push up with stocks on news of another $2.3 trillion cash injection by the Fed and is now sitting at around $6,900.
Kraken, OKex, Bitfinex, and several other exchanges have all reported a big boost in sign-ups amid the coronavirus lockdown. But it seems the newcomers aren’t buying cryptocurrency just yet. Instead, data from ViewBase shows increased appetite for stablecoins like Tether — suggesting new investors could be waiting for the best opportunity to buy, as Bitcoin’s value proposition as a hedge against inflation becomes more attractive.
Gold, the age-old inflation hedge of civilization, is already pushing up to prices not seen since 2012. And many analysts think bitcoin could follow as the halving event puts the fixed supply of 21 million coins into focus against seemingly unlimited fiscal stimulus.
But at the moment, bitcoin is still roughly mirroring the movements of the S&P 500, suggesting its destiny is still likely to be intertwined with the stock market in the short-term future.
On the chart, bitcoin has printed a classic support/resistance flip.
After breaking through a wall of sell orders at $7,000, bitcoin moved up to probe the next level of resistance at $7,500 before dropping back to test the presence of buyers at around $7,000 again.
If this support fails and the daily candle closes below $6,900, then we are likely to see more downside.
A display of strength at this area, on the other hand, would leave the bull trend intact and is likely to lead to a retest of the highs at $7,500.
No fanfare for Bitcoin Cash Halving
Despite the bullish narrative around the event, Bitcoin Cash failed to rally after its halving on Wednesday and instead sank around 10% to find support around $230.
As the coin’s first 50% block reward reduction since forming from bitcoin, this is a significant milestone, but it is likely that the Bitcoin halving due in mid-May will have more of an impact than the coin’s own halving.
Technically, Bitcoin Cash is also showing a similar pattern to Bitcoin, having broken out of an ascending triangle and returned to retest support at the top of the triangle.
Altcoin favorites win the week
As Bitcoin stalls, traders are recycling funds into the favorite altcoins of the past year.
Leading oracle platform Chainlink has soared more than 30% over the last seven days. This comes as New York-based cryptocurrency exchange Gemini announced that it will list the coin on April 24th.
Close behind, proof-of-stake cryptocurrency Tezos has pushed up 17% this week after the Tezos Foundation announced it will issue the first tokenized version of bitcoin on the Tezos blockchain — tzBTC.
The information in this article is for informational and educational purposes only and should not be considered financial or investment advice. Investing in ICOs, IEO’s, cryptocurrencies, or tokens is highly speculative, and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.