Bitcoin (BTC) is reporting a short-term bearish-to-bullish trend change likely due to sharp gains in alternative cryptocurrencies (altcoins).
As of writing, the leading cryptocurrency is trading at $6,700 on Bitfinex – up 4.6 percent on a 24-hour basis – having hit a 16-day high of $6,745 earlier today.
BTC’s recovery from the five-week low of $6,100 hit Wednesday is likely fueled by increased investor demand for altcoins. For instance, XRP – the fourth largest cryptocurrency by market capitalization – has risen by 42 percent in the last 24 hours and 18 percent of the total trading volume is coming from XRP/BTC pairs, according to CoinMarketCap.
Aurora (AOA) is up 57 percent on the day and is the best performing cryptocurrency on CoinMarketCap. More importantly, about 60 percent of the total trading volume is originating from AOA/BTC pairs. On similar lines, MONA’s 43 percent price rise is likely being fueled by MONA/BTC and MONA/JPY pairs, volume data shows.
It is worth noting that most alternative cryptocurrencies are traded against majors like BTC and ethereum’s ETH token. So, money tends to flow into altcoins via BTC and that creates upside pressure on the leading cryptocurrency.
As result, BTC could be in for further gains if the altcoin rally attracts new investors to the market. Further, a convincing move above $6,600 (Sept. 14 high) is painting a bullish picture on the technical charts.
Daily chart
As seen in the above chart, BTC moved past the double bottom neckline resistance of $6,600 earlier today, confirming a bullish reversal.
The cryptocurrency could test the upper edge of the pennant pattern, currently located at $7,050, over the weekend.
A UTC close above that level would add credence to higher price lows set over the last three months and open up upside towards July highs above $8,500.
View
- BTC’s recovery from $6,100 is likely associated with altcoin rally.
- The double bottom breakout has opened the doors to $7,050. A UTC close above that level would confirm a pennant breakout and boost the prospects of a sustained rally to $8,500.
- On the downside, acceptance below $6,600 would neutralize the immediate bullish outlook. A UTC close below the pennant support will likely embolden the bears.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin and USD image via Shutterstock; Charts by Trading View
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