The cryptocurrency market has topped $2 trillion for the second time, gaining over 2.7 percent in the previous 24 hours. Meanwhile, Bitcoin has not kept up with the surge in altcoin prices: BTC gained 1.45% versus a 4% rise in ETH, while other major currencies gained between 3% and 7%.
After the first cryptocurrency defended the $40K barrier, the purchasing of altcoins has increased. This acted as a vote of confidence in the sector’s short-term prospects, allowing fans to invest in possibly cheap coins and projects once again.
The crypto Fear and Greed Index rose one point to 22, indicating that investors saw the recent drop as a buying opportunity.
Since September, bitcoin has recovered from a psychologically significant support level on the chart for the second time. Furthermore, the RSI indicator moved out of the oversold territory on the daily charts, indicating a respite in the negative trend.
However, it is too soon to declare that we see the start of a new development cycle. This is due to some factors.
The RSI indicator achieved lower lows than earlier in December and much lower levels in September and July during this wave of selling, indicating more sustained and extended selling than in prior episodes.
Bitcoin’s efforts at consolidation this week are little more than a wobble at the bottom. Solid upward momentum in July or September will signal a positive turnaround. The bears rapidly ate away at the mini-recovery in December.
BTCUSD is stabilizing at the falling channel’s bottom limit. Only if it climbed over 45k – where the previous local lows and the downward resistance line are located – can we declare that we are seeing more than simply a rebound inside this trend.
If bitcoin fails to create an upswing, it will severely harm cryptocurrency traders’ attitude, producing a poisonous climate in the industry and reintroducing selling into the equation, regardless of individual project chances.