Bitcoin (BTC) spiked 11 percent Monday, likely due to a sell-off in tether (USDT), but a bullish reversal is still not confirmed, technical charts indicate.
The leading cryptocurrency jumped to a 2.5-month high of $7,788 at 06:45 UTC on Bitfinex – the cryptocurrency exchange that manages USDT developer Tether LLC.
Interestingly, the stablecoin was down 2 percent just before BTC picked up a bid at 05:00 UTC, and fell further to an 18-month low of $0.925284 at 07:00 UTC, as per CoinMarketCap.
The unusual drop indicates investors have moved money out of USDT and into bitcoin and other cryptocurrencies – possibly on a fresh round of doubts over whether the stablecoin is fully backed by dollars.
Further, there's evidence of growing interest in emerging stablecoins like Paxos Standard (PAX), TrueUSD (TUSD) and Gemini Dollar (GUSD), which all reported gains during the USDT sell-off.
More importantly, the majority of the rapid gains in BTC likely happened via trading on Bitfinex, where prices rose well above $7,000. Notably, the premium carried by bitcoin prices on Bitfinex rose above $600 early in the European day. Meanwhile, on non-tether-enabled platforms like Coinbase's GDAX, prices only peeped above $6,800.
At press time, BTC's average price across various exchanges, as calculated by CoinDesks's Bitcoin Price Index (BPI), is $6,510, representing a 4.6 percent gain on a 24-hour basis.
On Bitfinex, the leading cryptocurrency is trading at $6,837, while on Coinbase, it is changing hands at $6,824, meaning BTC is still trading at a premium of $400 on Bitfinex.
As seen in the above chart (prices as per Coinbase), BTC's rally has neutralized the immediate bearish view put forward by last week's downside break of the rising trendline.
However, a bullish reversal would be confirmed only after the cryptocurrency has found acceptance above the Sept. 4 high of $7,402.
Moreover, bulls are not out of the woods yet as the following key resistance levels are still intact:
- $6,462 (trendline falling from July highs)
- $6,823 (Sept. 22 high)
- $7,090 (trendline connecting March highs and July highs)
Meanwhile, major support is seen at $6,150 (today's low), $6,000 (February low) and $5,777 (June 24 low). So, it seems safe to say that there is more room on the downside than upside.
- The immediate outlook is neutral and the pullback from highs above $6,800 has kept the bears in the game.
- A UTC close above $7,090 (long-term falling trendline) would boost the prospects of bullish reversal above $7,402.
- On the downside, a move below $6,150 (today's low) would put the bears back into the driver's seat, allowing a drop to June lows below $5,800.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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