The bear attack on Bitcoin is frightening, but it does not break the trend
|Market overview
The crypto market is clearly struggling to move upwards, as historic highs are also attracting sellers. On Friday morning, the total capitalisation of cryptocurrencies stood at $4.03 trillion, reflecting a 3.4% decline over 24 hours. Although this is unpleasant for bulls, it looks like a necessary correction to let off steam while the market remains above the July highs of $3.90-3.95 trillion, a break below which would signal a trend reversal.
Bitcoin fell to $117K on Thursday, becoming the first domino to fall, which subsequently pulled down the entire cryptocurrency market. This is further evidence of increased selling pressure shortly after the historic highs were updated. We believe that the fairly coordinated attack by bears is a cover for careful but abundant purchases on dips. It is worth sounding the alarm if there is a break below the 50-day average at $115K and the area of recent lows at $112K.
News background
The leading cryptocurrency is facing serious competition from Ethereum. The US Congress's adoption of the stablecoin bill has opened the door to the mass adoption of these tokens. About half of them use the Ethereum blockchain.
The Ether rally is outpacing Bitcoin's upward movement since it correlates more with US stock indices than Bitcoin. Specialised exchange-traded funds focused on Ether attracted $1.7 billion in August. During the same period, Bitcoin ETFs faced an outflow of $436 million. The reserves of crypto treasuries working with Ether grew to $17 billion.
The growing popularity of the second-largest digital asset has allowed Standard Chartered to raise its forecast for Ethereum from $4,000 to $7,500 by the end of the year.
The fate of cryptocurrencies still depends on changes in global risk appetite. Therefore, a continuation of the S&P 500 rally will push both Bitcoin and Ether to new record highs.
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