Following the cryptocurrency market’s recent surge that sent Bitcoin’s price above $4,000, the markets have held relatively steady with most altcoins dropping slightly. Although the recent pump was relatively small, the continuance of Bitcoin’s gradual climb that has ensued since it touched the low-$3,000 region is positive for its future price action.
Bitcoin Manages to Stay Above $4,000
Bitcoin’s ability to stay above $4,000 so far has not led to any widespread rallies in the altcoin markets, as most investors are patiently waiting to see if it is able to hold above this level for an extended period of time.
Over the past month, Bitcoin has sharply dropped every time its price jumped above $4,000, signaling a lack of buying pressure above this price. Despite this, one widely used technical indicator, called the Directional Movement Index (DMI) just crossed into positive territory for the first time in months, signaling that a temporary price rally for Bitcoin could be right around the corner.
This indicator gages the strength of trends and is commonly used by traders to assess whether or not a rally or decline has significant pressure backing it. Although the DMI does not give much valuable information regarding long-term trends, its data can be highly valuable for short-term price movements.
At the time of writing, Bitcoin (BTC) is trading down approximately 1% at its current price of $4,030, and one prominent analyst believes that it is likely to continue ranging between $3,000 and $5,000, with the latter price being a point of significant resistance.
Mati Greenspan, senior market analyst at eToro, shared his thoughts regarding Bitcoin’s current price action in his daily market update, also noting that $4,000 is not a particularly important price level for Bitcoin.
“Even though $4,000 is a nice round number it doesn't necessarily represent any sort of significant psychological level. If we zoom out, and as we've been discussing for a few weeks now, we can see that the overall range that we're in is from $3,000 to $5,000 per coin… So we're now at the halfway mark in the middle of the broader range,” Greenspan noted.
Altcoin Markets Drop Following Yesterday’s Surge
Bitcoin’s climb to $4,000 over the weekend led many altcoin’s prices to jump, but many of them have now surrendered a portion of these gains today.
At the time of writing, Ethereum is trading down just under 4% at its current price of $151.6. Ethereum has faced significant resistance at approximately $160, as it has failed to break above this price on several occasions over the past seven days.
It is important to note that Ethereum is nearing its upcoming Constantinople fork event, which is scheduled to occur around January 16th, which could lead to price gains as it will reduce the supply of new Ethereum.
XRP is currently trading down over 1% at its current price of just over $0.36 and is trading down from its daily highs of nearly $0.38.
Bitcoin Cash (BCH) also dropped today and is currently trading down over 3% at its current price of $161.47.