Bitcoin Takes a Breather After Testing $7,500
We saw green across the board this week for most markets. BTCUSD failed to break through $7,500 which is historically a key level. This was followed by a drastic correction in the past 24 hours. It appears to be a technical move as market players are still heavily long with a spike in open interest. This could be a sign that traders are entering on the dip.
It’s halving season and all eyes were on BCH and BSV. This was the first time halving for each of them since forking from Bitcoin. Both rallied ahead of the event, similar to what we saw with LTC in Aug ‘19. Based on this model, expect some underperformance in the near-term without additional catalysts.
Additionally, BCH and BSV cut their inflation rates, we can expect to see the market adjust to these changes over the next few weeks. BCH’s network also had a temporary stop over the past week. We will be watching this closely to see how things play out.
Another negative we saw is the shift in hashrate away from these coins over to BTC. BTC’s halving is still a month away and most likely it will be more profitable to mine BTC. So if we assume mining costs act as a floor to pricing, lower hashrate is fundamentally negative (not to mention network security).
On a positive note, Paxful now allows users to transact in physical gold, offering a swap option and a transfer procedure. There are a growing number of companies backing their tokens with gold. Paxos is another example that back their digital token in gold. Gold is starting to play a bigger role in cryptocurrency transactions. The recoil from this move could send ripples throughout the crypto world.
In all it was a fairly positive week in the market despite minor turbulence. With BCH undergoing its first halving event being the highlight and a major milestone for that cryptocurrency. We can see a lot of exciting things developing in the market. However, it’s still yet to be seen whether or not Bitcoin and cryptos are decoupling, and if they have, to what extent.