After a couple days of upwards trading, the cryptocurrency markets have continued to sell-off, led by Bitcoin, but are still sitting above their recently established lows. Today’s drop could be the result of traders taking profits on short-term long positions, according to one research firm.
At the time of writing, Bitcoin is trading down 6.5% at its current price of $4,045, down from yesterday’s highs of just over $4,400, but still up over 12% from its recently established lows of $3,600, which were set earlier this week.
This downwards move, however, could be temporary, and could be the result of traders taking profits on their short-term long positions.
While speaking to MarketWatch, analysts at the U.K.-based research firm, FX Pro Insights, explained this theory, adding that it remains unclear as to whether or not a long-term bottom has truly been established in the markets.
“Many market participants have decided to take an optimistic approach and BTC’s decline to $3,500 was an important support point for the cryptocurrency… Within this context, it should be noted that speculators may soon begin to profit from this trend, which may trigger a new wave of sales… The real question is: Has the crypto market indeed reached the bottom?” they said.
Yesterday, Rob Sluymer, a technical analyst at Fundstrat Global Advisors, said that Bitcoin may be in the midst of a multi-quartering bottoming pattern, which could mean that a new upwards cycle is just around the corner.
“In contrast to bounces that have developed through 2018, weekly RSI [relative strength index] is now at levels not seen since BTC’s last bear market low in early 2015 and BTC is showing very early evidence of responding to its long-term uptrend after three major downside moves through 2018… Our expectation is that BTC is in the very early stages of establishing a multi-quarter bottoming process that is likely to extend well into mid-2019,” Sluymer explained.
Altcoins Trade Down
Presently, the altcoin markets are trading down across the board, with many cryptos trading down 4% or more from yesterday’s prices.
At the time of writing, XRP has declined 4% at its current price of $0.36, a drop from its recent highs of nearly $0.40, but up over 10% from its recent lows of $0.32. It is important to note that XRP is still trading up significantly from its 2018 lows of $0.24, which were set in August and re-visited in early-September.
Ethereum is currently trading down just under 4% at its current price of $114.8, which is a drop slightly from yesterday’s highs of $126, but it is still trading up nearly 15% from its recently established 2018 lows of $100.
Stellar (XLM), which was one of the best performing altcoins of the past couple of days, was unable to avoid today’s drop, and is currently trading down 4% at its current price of $0.16. XLM has secured the number four position by market capitalization, surpassing that of Bitcoin Cash.