On October 5, and against all odds, Bitcoin defied many expectations to finish the 24-hour trading session above $50,000, thus prompting optimistic traders to set their sights on $55K over the next couple of weeks. Can this be sustained despite the inherent volatility in the cryptocurrency markets?
Bitcoin briefly crossed over $50,000 a few weeks ago, but the price didn’t hold and quickly retraced lower in the weeks since. That pattern repeated and the price has been trending in a tight range for weeks now. Since then, the price has bounced between the low $46,000s and mid-$49,000s, a consolidation that has been characterized by a relatively tight trading range and few transactions on exchanges. The consolidation has come with increased scrutiny and volatility, as altcoins have become more marketable. But with the market moving in a very narrow price range, it was only a matter of time before Bitcoin broke out.
It now seems as though $50,000 might be the high end of the price consolidation for 2021, and the low $40,000 range for the rest of the trading year. Bitcoin’s price action through the end of the year At the start of the year, Bitcoin looked to be in a bull market, but that turned out to be a head fake in the midst of economic uncertainty created by the coronavirus pandemic.
Although Bitcoin is still the most used cryptocurrency, other altcoins have been able to grow. Ripple’s XRP, which was formerly known as Ripple’s XRP Asset, has increased in value by almost 90% over a couple of trading sprees this year. Compared to the price action of Bitcoin, XRP seems to be a better gainer.
Ethereum’s price looks to be a target for miners as the end of the year approaches. Although the crypto markets have gone on extended bearish rallies, the number of transactions continues to fall off since the beginning of the year. During the same time period, there has been a big decline in the number of bitcoin transactions taking place on exchanges, despite the price of Bitcoin staying at a relatively high level. According to Bitcoinity, there has been just less than five million transactions on exchanges during the first two months of 2020, down from the all-time high of more than 10 million in December 2018.