Bitcoin is bouncing back from losses arising from the hack of an alternative cryptocurrency.
As per CoinMarketCap, the bitcoin-U.S. dollar (BTC/USD) exchange rate slumped to a low of $7,762 at 04:59 UTC, before quickly recovering to $8,100. At press time, the cryptocurrency is changing hands at $8,090 levels. Despite the massive gyrations, BTC is still up 0.66 percent on the day.
Tether was set up as a proxy for US dollars that can be sent between exchanges, including Bitfinex, Poloniex and others. Thus, the initial response from the market was cautious, as traders weighed the possible market ramifications.
However, bitcoin soon recovered to $8,100 levels, possibly as traders absorbed the news of Tether's plan to lock up the stolen tokens by updating its Omni Core software client.
Either way, BTC could remain well bid as investors may price-in the potential surge of institutional interest in the cryptocurrency following the listing of BTC futures on the CME exchange – anticipated for a Q4 launch.
Further, the price action analysis shows no major signs of stress in the market.
The above chart shows:
- The sharp recovery from below $7,800 has defended the bullish flag breakout.
- The relative strength index (RSI) is bullish (above 50.00) and well short of the overbought territory.
- A bearish divergence (higher highs in price, lower highs on the RSI) has been confirmed, but only a break below the daily low of $7,800 would open the doors for a deeper pullback.
Bitcoin could set new highs around the resistance at $8,553 (0.618 Fibonacci extensions). As discussed yesterday, the bull flag breakout has opened doors for a rally to $10,000.
Pullback scenario: A break below $7,800 would add credence to bearish price-RSI divergence (seen on the 4-hour chart) and could yield a drop to 10-day MA seen today at $7,400.
Chain image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.