Cryptocurrency investors tested the water on Wednesday, with Bitcoin rallying to an intraday high $8,649 through the middle of the day, before retreating back to a $7,721 close that left Bitcoin down just 0.21% for the day.
There has certainly been a shift in sentiment towards the cryptomarkets and the bulls are beginning to resurface after weeks of hiding, with talk of the cryptomarket hitting $1tn this year doing its rounds across the news wires.
For investors, there were two key takeaways from the week so far. Firstly, the news of the PBoC looking to ban foreign and domestic cryptocurrency trading being identified as fake news. The second being the calls for a ‘do no harm’ approach to the U.S market and blockchain technology in general.
With so much negative sentiment in recent weeks, the markets were certainly in need of some less dramatic calls for bringing down the cryptomarket as we know it today.
While the dust may be still settling, there are still plenty of unknowns however, which would likely have contributed to the selloff from Wednesday’s highs that was seen across many of the cryptocurrencies.
When considering the fact that Bitcoin enjoyed a 46% rally from its Tuesday low to Wednesday’s high, the profit taking move was a justified one.
At the time of writing, Bitcoin was up 9.29% to $8,292.57, rising well above its intraday low $7,565.50, with Bitcoin recovering more than $2,000 in the last 24-hours.
There’s still plenty of money off the table however, with Bitcoin’s market cap sitting at $136.19bn and perhaps more importantly, while there have been broad based gains across the cryptomarket’s majors through the middle part of the week, Bitcoin’s dominance has stood firm at above 35%, suggesting that investors have been a little more cautious in the exposures they are willing to take at present.
For the day ahead, while it’s looking relatively bullish, caution will likely remain the name of the game, with speculative investors likely to lock in profits, with bad news capable of hitting the news wires at any time.
The good news however, does continue to be the support that the cryptocurrencies have received, with the cryptomarket bears likely to be looking in disbelief at the market’s recovery.
Whether Bitcoin can close out the week at $10,000 levels looks unlikely at present, with plenty of resistance at current levels, but a weekend move may not be out of the question, as long as the news wires stay silent and the 2017 optimism that saw the cryptos hit sky high levels continue to fuel the recovery.
Elsewhere, Bitcoin Cash was also in positive territory, holding on to $1,000 levels, with Ethereum leading the pack, up 11.15% to $833.69 at the time of writing.
When considering the losses seen across the global equity markets this week, the timing couldn’t have been better for the cryptomarkets, with the reality being that the latest correction was not that bad and may ultimately provide investors with greater confidence in the months ahead.