Market Wrap: Bitcoin Down to $26K but Traders Remain Bullish

Few seem to be bothered by bitcoin’s volatility on Tuesday, as the No. 1 cryptocurrency by market capitalization declined to the $26,000 level after its first-ever trades above $28,000 on Sunday. Many market participants are convinced retail and institutional investors will push bitcoin’s price higher after the holiday lull.

  • Bitcoin (BTC) trading around $26,937.67 as of 21:00 UTC (4 p.m. ET). Gaining 0.37% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $25,875.05-$27,117.95 (CoinDesk 20)
  • BTC between its 10-hour and 50-hour averages on the hourly chart, a sideways signal for market technicians.

Bitcoin trading on Bitstamp since Dec. 23
Source: TradingView

With limited institutional trading activity during the final days of 2020, traders and analysts told CoinDesk the recent price movement has been largely driven by retail investors.

“It’s quite unusual for the past whole week being like this, given it’s a holiday season. Usually during the holiday season there’s a liquidity crunch,” Mable Jiang, principal at crypto hedge fund Multicoin Capital, told CoinDesk. “The heat was partially driven by the recent run-up of bitcoin, and the resurfacing retail interest in the market, at least in China.”

Jiang noticed a few patterns in recent trading activity among retail investors. Some are rolling alt-coins into bitcoin and ether. Others are looking for coins that may potentially outperform bitcoin on returns in the coming months.

Bitcoin volumes by exchange since Dec. 1. 2020
Source: CoinDesk, CryptoCompare

In TradeBlock’s weekly market commentary on Dec. 28, the cryptocurrency analysis firm wrote that recent highs for bitcoin and ether were driven by outflows from XRP.

“The only two digital currencies the [Securities and Exchange Commission] has definitely stated are not securities are bitcoin” and ether, TradeBlock said. “As regulatory uncertainty increased in the alt-coin market after the SEC’s action [against Ripple Labs, claiming it was…

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