MOSCOW, 2 SEP – PRIME. The calm of the late summer that has swept Wall Street is dreaming even for bitcoin, which was stuck at the $ 50,000 mark in the midst of its August rally. The cryptocurrency closed at $ 48,279.42 on Wednesday and climbed slightly above $ 50,000 on Thursday.
Bitcoin is famous for its volatility. From January to mid-April, its price more than doubled, after which it fell by 52% in three months, and jumped by about 65% in July-August.
So why is Bitcoin stalling now? First, investors are starting to look closely at other assets in the crypto market.
According to CoinShares, the inflow of investments in funds with ethereum in August amounted to $ 22.4 million, and in funds specializing in cardano (a blockchain platform similar to ethereum) – $ 18.7 million. Ethereum rose 10% to $ 3,730 on Wednesday, the highest level since May 15. Since the beginning of the year, the price of Ethereum has already increased fivefold.
The non-fungible token (NFT) quotes that jumped in the spring are showing rapid growth even now, diverting funds from bitcoin. NFTs are digital assets that differ from bitcoin in that each token is unique.
According to DappRadar, over the past 30 days, OpenSea, the largest NFT exchange, has trading volume of $ 3.5 billion, while from its inception in 2016 until August, the exchange’s total trading volume was only about $ 1 billion.
More recently, two key American companies have entered the NFT market – Visa Inc. and Facebook Inc. Visa has acquired NFT CryptoPunks, and Facebook has announced that it is considering building services for NFT in its future digital wallet.
This kind of news has propelled Bitcoin’s course in the past, and it probably should have taken the lead in headlines like this again to gain momentum.
The August rally failed to attract many new buyers to Bitcoin. Bitcoin funds outflowed $ 61 million in August, according to CoinShares, with an outflow seen in 14 of the last 16 weeks.
Momentum Structural Analysis analyst Bret Oliver notes that the dynamics of Bitcoin trading after the April peak is similar to what happened to him in 2017.
In 2017, Bitcoin reached about $ 20,000, but in the next three months it fell sharply and then was in a protracted downtrend for more than a year, which was replaced by another rally.
The current downtrend doesn’t have to be as long as the last one, notes Oliver, who expects Bitcoin to be stuck in a range after this year’s sell-off and then form a new base. This means that even if the July low holds, Bitcoin’s recovery will be an ongoing process, Oliver says.
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Dow Jones Newswires, PRIME
The material is taken from open sources. The opinions of the experts mentioned in it may not coincide with the position of the editorial board. “Prime” does not provide investment advice, the material is published for informational purposes only. Cryptocurrency is a risky asset, investments in it can lead to losses.