Cryptos Trend Higher as Dip Buyers Take Advantage
Cryptocurrencies experienced an upward trend on Wednesday as dip buyers finally arrived to capitalize on price levels not seen since early 2023. This presents a reward for patient traders who understand the volatile nature of the crypto market and know that better deals will eventually emerge once momentum subsides.
Stocks Climb Higher Ahead of Jackson Hole Speech
Stocks also saw gains, with the S&P, Dow, and Nasdaq all closing in the green, up 1.10%, 0.54%, and 1.59%, respectively. Investors eagerly anticipate Friday’s Jackson Hole speech by Fed Chair Jerome Powell, where he is expected to emphasize a ‘higher-for-longer’ stance on interest rates and push back on calls for rate cuts to ensure a decline in inflation.
Bitcoin Sees Boost in Momentum
Bitcoin (BTC) traded near support at $26,000 throughout the morning but experienced a surge in momentum in the afternoon, reaching a daily high of $26,825. Bulls now aim to extend these gains and recover support above $29,000. However, Kitco senior technical analyst Jim Wyckoff cautions that a price downtrend line is in place on the daily chart, indicating potential downside pressure in the near term.
Low Liquidity Contributes to Crypto Market Drop
Last week’s harsh drop in Bitcoin and the entire crypto market was attributed to very low liquidity. There is minimal volume for effective trading, and all movements are fueled by borrowed money. Furthermore, interest in crypto remains low, creating an unfavorable trading environment. Analysts urge traders to be patient, let Bitcoin establish a range, and await price confirmations before initiating trades.
Analysts Warn of Possible Double Top Formation
Market analysts raise concerns about a potential double top formation on the Bitcoin chart. However, as long as support holds around $26,000, the double top is unlikely to materialize. Key resistances, such as bullish momentum moving averages, may act as barriers to further price appreciation. Traders are advised to observe how Bitcoin reacts to these levels before making any trading decisions.
Altcoins Experience Reversal of Fortune
Altcoins largely traded in the green, with only six tokens in the top 200 recording losses greater than 1.3%. SafePal (SFP) led the gainers with an 18.9% increase, followed by Sui (SUI) with a 15.6% gain. The overall cryptocurrency market cap now stands at $1.07 trillion, with Bitcoin’s dominance rate at 48.4%.
