Yesterday, on February 25, CCN reported that the cryptocurrency market struggled to maintain momentum in the $500 billion region, falling to $430 billion as sell volumes intensified. A similar trend occurred today, as most major cryptocurrencies including bitcoin struggled to record gains.
Bitcoin and Ethereum
On February 26, only Litecoin and Ethereum amongst the 10 most valuable cryptocurrencies in the global market managed to record daily gains. Ethereum’s native cryptocurrency Ether demonstrated a slight increase in value of 1 percent from $841 to $852, after dipping below $820 on February 25. Ether remains as the only cryptocurrency apart from Litecoin to show some upward momentum, but its trading volume is still relatively low.
Over the past few weeks, Ether has tended to follow the price trend of bitcoin throughout the recovery period from its monthly lows. But, in some periods, Ether moved in a divergent path from bitcoin and other cryptocurrencies. Last week, when bitcoin spiked in value to $12,000, Ether and ERC 20 tokens or ICO tokens performed poorly. This week, Ether has performed better than bitcoin, moving in a different direction to the most dominant cryptocurrency in the market.
This week, bitcoin has struggled to remain above the $10,000 mark, which many analysts have described as the psychological threshold for traders. It is difficult to evaluate the short-term trend of bitcoin during this period in which bitcoin, the most liquid and dominant cryptocurrency in the market, is experiencing huge upswings and declines on a daily basis.
Merely one week ago, the price of bitcoin doubled from its yearly low at $6,100, breaching the $12,000 mark. In some regions like South Korea, the price of bitcoin briefly surpassed the $13,000 mark. As of today, the price of bitcoin remains below $9,600, demonstrating little signs of recovery back to the $12,000 level in the short-term, due to its low volumes.
In early February, as CCN reported, Pantera Capital’s Dan Morehead stated that the price of bitcoin will likely start increasing by the 72nd day since its major correction in January, given that most short-term bubbles typically tend to burst and momentum rebuilds in less than 3 months.
“So it seems like another couple of weeks and everything will be kind of normal and it could start grinding back up,” said Morehead.
Tether, a cryptocurrency that is backed by the US dollar at a 1:1 ratio, is an important indicator of the short-term performance of the cryptocurrency market. Many investors on major cryptocurrency exchanges like Binance and Bitfinex utilize Tether to hedge the value of cryptocurrencies during a volatile period, especially when the market begins to fall.
As of February 26, the daily trading volume of Tether is $1.975 billion, making it the second most liquid cryptocurrency behind bitcoin. The large daily trading volume of Tether indicates that many traders are uncertain about the short-term trend of major cryptocurrencies, and are hedging the value of cryptocurrencies in the market to the US dollar.