Bitcoin isn’t the only cryptocurrency trading at all-time highs today.
At press time, the vertcoin-U.S. dollar (VTC/USD) exchange rate is $5.55, its highest level ever. Week-on-week, VTC has witnessed a 69 percent appreciation in value, while on a monthly basis, its price has gone up by an astonishing 431 percent.
So, what’s behind the rally? The boost for the lesser-known crypto appears to be occurring as it closes in on a reduction of its block reward, expected on Dec. 12.
The term “block reward” refers to the amount of the cryptocurrency received by miners for creating a block. As a result of a coded halving mechanism, production of new coins will drop from the current level of 50 VTC to 25 VTC in a matter of weeks.
With this drop in supply on the cards, simple economics suggests that value of existing vertcoins might be likely to rise. Traders would seem to agree, as volumes have climbed 79.22 percent in the last 24 hours, most notably on the Bittrex and Poloniex exchanges.
Another reason for the rally could be increased attention on the coin following the introduction of cross-chain atomic swaps, which allow direct trades between its blockchain and other compatible networks.
On Sep. 20, Litecoin creator Charlie Lee tweeted the news of a successful swap between the litecoin (LTC) and vertcoin blockchains using the technique, making it one of the first to support the innovation. Looking back, VTC began its record rally in late September, indicating the positive impact of the technology may have been priced-in.
However, at press time, the rally looks to be stalling and the price action analysis indicates the potential for a healthy correction.
If the current candle closes in the red, a bearish price-relative strength index (RSI) divergence would be confirmed. A bearish divergence occurs when the price forms higher highs and the RSI forms lower highs. It indicates a weakness in the trend.
- VTC could see a healthy pullback to $4.00 if the bearish RSI divergence is confirmed.
- The RSI is overbought on the daily chart as well, hence a short-term consolidation in the range of $4.00 to $6.00 is more likely.
Circular saw image via Shutterstock