A rally in major cryptocurrencies that began a couple of weeks ago is showing signs of breaking down. Bitcoin and XRP are selling off, while LTC and XLM continue to build on the gains they made in the previous week.
As of Saturday evening, Bitcoin had lost 5.75% over the previous seven days and XRP 5.77%, while LTC had gained 4.95% and XLM 2.56%.
The broader market was also selling off, with 39 out of the top 100 cryptocurrencies advancing and 61 declining. It’s a big reversal from the previous week when 78 out of the top 100 cryptocurrencies advanced and 22 declined.
A reversal in the advance-decline ratio is a sign that the recent rally is in trouble, with money rotating from one cryptocurrency to another, and leaving the market altogether.
Nicholas Pelecanos, Advisor to NEM Ventures, watches the $8,700-mark for Bitcoin. “BTC has just been rejected from the top of its range,” he says. “If the selling slows down and the price reverses around the $8,700 mark, there is a possibility that a bull flag may form and propel BTC back into the $10,000s – a break of the Ichimoku cloud resistance would help confirm this trade.”
Whatif the selling continues? “BTC may head toward the bottom of its downtrend, a -20% move from the current price which will form a new low,” Pelecanos says. “This would be very bearish for BTC and we could see a sub $7,000 BTC by December.”
Meanwhile, cryptocurrency traders must be prepared for the increasing market volatility associated with Thanksgiving season. It’s a time when Americans get together with friends and family, enjoy a nice meal, and talk about current events, including hot investments.
That adds to the hype for these investments, as their price movements more fully reflect swings in investor emotions rather than changes in fundamentals.
That could perhaps explain why Thanksgiving season has been a time of wild swings in speculative assets, as was discussed in a previous piece here.