Posted 3 years ago | by Ben Armstrong
Bakkt Soft Launch Stalls Bitcoin Price: Buy the Rumor, Sell the News?
On Tuesday, Bakkt Warehouse opened, and clients were able to deposit Bitcoin funds into accounts.
However, minutes after the tweet announced the opening, the price of Bitcoin dropped by $700 — a classic example of buying the rumour and selling the news, in which traders and investors buy an asset with the expectation of a positive outcome from a future event.
However, when that future event actually transpires, the price is not impacted and it maintains its original level. Such a scenario was seen in 2017 with altcoins, and recently with the halving of Bitcoin and Litecoin.
Bitcoin Bounces Back From Baakt Breakdown
Bitcoin reclaimed the $9,800 level as support and started to rally upwards to the heavy resistance zone of $10,800-11,000.
The general overview of Bitcoin offers a perspective of re-accumulation after the first break upwards. Examining past performance can give a possible prediction of the future. In 2016, there was also a period of sideways movements. In the current scenario, the market is still waiting for confirmation of the bull market before it’s able to trend upwards.
Other factors in this scenario include the September 23rd launch of Bakkt Bitcoin futures platform and the predicted May 2020 halving, both of which could have a beneficial effect on the market. In fact, any positive news related to Bitcoin ETF should have a bullish impact.
Altcoins Buck Trend
However, on a more interesting note, altcoin/BTC pairs started to bounce slightly during the past dropdown of Bitcoin, and the total market cap, excluding BTC, is still maintaining at the same previous level of resistance.
During the previous dropdowns of Bitcoin, including those starting in January 2016, altcoins also moved down, since they were correlated to Bitcoin. However, it is conceivable that this trend is reversing.
In 2015, there was a nice run of the market cap, though it was mainly caused by Bitcoin running upwards. Later, a sharp dropdown occurred to retest the previous resistance levels.
This scenario is similar to the current market, and appears to be a confirmed retest of the old resistance area. Essential for that is a bounce in altcoin/BTC pairs, in which the total altcoin market cap remains flat during drops of Bitcoin.
BTC Market Cap Dominance is Hot Topic
During the past months, one of the most discussed topics in the whole crypto community is the bitcoin market cap dominance. This dominance has to drop before serious altcoin movements can occur.
From the previous “altseasons,” a bearish divergence was observed on the Bitcoin dominance chart prior to a severe dropdown, as seen in January 2016. Currently, a potential bearish divergence can be created on the market in the next week, which could cause a trend shift towards altcoins.
In a bullish scenario, Bitcoin price has to maintain the support area around $10,100-10,200 and clearly break through the significant resistance and downtrend. The rally that started earlier this year seems to be intact, but there could be more going on underneath the surface than we know.