After failing at $20,000 resistance in mid-December, Bitcoin has seen a crash followed by an on-going consolidation. The hype around cryptocurrencies is still strong though, so what is keeping the price of Bitcoin down.
While Bitcoin remains the world´s largest cryptocurrency (and is unlikely to lose that place in the near future), many new ones have managed to get the attention of the crypto speculators. Names likes Cardano, Verge, Stellar, TRON, NEM and NEO all saw a huge rally in the past few weeks, which attracted further momentum buying.
This also explains the decline of the Bitcoin price. Fair value is a concept that cannot be applied in the crypto space, and speculators are simply chasing the highest possible return. Inflows into a variety of smaller coins thereby led to larger outflows in BTC, where there has been very little momentum in the past weeks.
It is not just the smaller cryptocurrencies that are on the rise. Ethereum and Ripple have seen significant gains as well, which represents another challenge for Bitcoin bulls. It remains seen if those gains are sustainable. A sudden loss in interest or panic selling in the alt-coins could spark another rally in Bitcoin. However, as that the communities of several those cryptocurrencies have evolved quite a lot, Bitcoin bulls should manage their expectations in the short-term.
What are the charts saying? Support can be expected at the rising trendline from late December low, followed by the major support level at $12,900. A clear break below that level would pave the way for a larger correction, with support then seen at $10,000.
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Sometimes you have to throw conventional wisdom out the door and just let the good times roll