The cryptocurrency market has demonstrated considerable calm in recent days, with the total capitalization of all coins holding steady above $400 billion. Although most major coins are well off recent swing lows, upside momentum has been capped by technical barriers limiting the bullish breakout. Nowhere is this more apparent than in bitcoin, which continues to serve as the primary bellwether for the digital currency market.
Crypto Markets Searches for Direction
The combined value of all cryptocurrencies fell nearly 3% on Tuesday to $419.2 billion, according to data provider CoinMarketCap. At the time of writing, more than 1,500 cryptocurrencies were collectively valued at $419.2 billion. About 460 tokens had a market value of $10 million or greater. of the 1,528 tokens tracked by CoinMarketCap, 363 were valued at zero.
Trading was relatively calm by crypto market standards, with total daily volume declining to around $17 billion. During the height of the bull market, 24-hour volumes were well north of $30 billion.
Bitcoin Prices Face Resistance
Bitcoin’s price recovery extended beyond $8,500 on Tuesday, but failed to make additional headway. The world’s most active cryptocurrency briefly traded above $9,000 in the previous session before correcting lower. At the time of writing, BTC was valued at $8,630 for a market cap of $146 billion.
Although bitcoin has all the signs of a stalled rally, the coin has rebounded more than 40% from last week’s low. Relative strength on the intraday chart has broken above 50, a level that is generally associated with the return of bullish momentum, while the MACD has returned above zero. Although neither of these indicators imply a bullish breakout, they suggest that momentum is returning to the market.
Bitcoin’s violent correction through Feb. 5 triggered multiple stop-loss orders as technical traders exited the market en masse. Once the dust settled, it was apparent that the correction was triggered largely by a phenomenon investors call FUD, which stands for “fear, uncertainty and doubt.”
The latest installment of FUD was caused by speculation that governments could be orchestrating a major crackdown on cryptocurrency trading. No such policies have been implemented recently. In fact, U.S. regulators sounded cautiously optimistic in their assessment of the market’s future when they testified before the Senate last week. And as we reported earlier, South Korea has implemented a limited trading ban on anonymous trading accounts.
The altcoin universe trended lower sideways on Tuesday, with the total value of coins not named bitcoin falling 2.6% to $273 billion. There were a few notable exceptions, including Ethereum Classic and bitcoin gold, which rose 23% and 7%, respectively.
Ethereum Classic began trajectory over the weekend and has now gained 54% over a two-day winning streak. The coin has just overtaken the Jan. 28 high and is now looking to test the intraday peak from Jan. 20.
At the time of writing, each cryptocurrency in the top five was trading lower, with Ethereum, Ripple XRP, bitcoin cash and Cardano declined by at least 2% apiece.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.
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