Bitcoin Rally Ends as Capital Flees

FXOpen

The 45-day rally in bitcoin is finally over. Prices hit a low of $5,426 three days ago. We have since bounced back but are still far away from the all-time high. Somewhat surprisingly Litecoin has gained ground during this turmoil.

Bitcoin Rally Ends

The long bitcoin rally is over, at least on the daily charts. Prices had a sharp correction of $2,361 dollars in the five days after segwit2x was canceled. As explained previously, segwit2x was a plan to increase the maximum block size from the current 1mb to 2mb, thereby allowing more room for transactions and lower fees.

btcusddaily-nov14-copy

With no plan to tackle the high fees problem in the near-term, some market participants are fleeing from bitcoin to other coins. The primary beneficiary here was bitcoin cash (BCH), which saw its prices increase five-fold from 0.08 BTC to peak at over 0.4 BTC during the weekend. The increased price, in turn, led to a rush of bitcoin miners to bitcoin cash, further exacerbating the problem with the high fees and the clogged mempool.

The average bitcoin fee to send a transaction rose to over $16 yesterday, compared with $0.30 for bitcoin cash. The bitcoin mempool is at over 100 mb right now, nearing the all-time highs seen a few months ago. The ‘mempool’ holds all broadcasted transactions that are not yet included in a block. After a price drop to 0.2 BTC and a major mining difficulty increase in bitcoin cash, miners are switching back to BTC. This could help ease the problems somewhat. Currently, the mining hash power is split 92% vs 8% in favor of bitcoin.

Technically BTC/USD is now back in a range on the dailies. A breakout below the $5,426 swing low is needed to start a new downtrend. A move beyond the all-time high at $7,887 would re-start the rally. On the longer-term weekly and monthly charts, BTC is keeping the bullish bias.

Litecoin Breakout Fails

Litecoin initially broke out from its range, only to fall back in two days later. While prices are higher, to call a new rally we need to see a sustained move above the new swing high at $66.69 dollars.

ltcusdh4-nov14-copy

On the lower end, the bears need a breakdown below the $53.25 swing low. This could start a new downtrend in LTC prices. There is no change in trend on the longer-term charts. The weekly is still range-bound while the monthly is looking bullish.

Start Bitcoin trading on FXOpen Crypto accounts.

FXOpen offers the world's most popular cryptocurrency CFDs*, including Bitcoin and Ethereum. Floating spreads, 1:2 leverage, 30% margin call, 0.01 lot minimum transaction size with no maximum — at your service. Open your trading account now or learn more about crypto CFD trading with FXOpen.

*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules respectively. They are not available for trading by Retail clients.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Cryptocurrencies

Bitcoin Cash Analysis: Promising Resistance Breakout Cryptocurrency Prices Rise on SEC Rumours Market Analysis: Bitcoin Sets September High BTC/USD Analysis: Bulls Lose Progress Amid SEC Defeat Bitcoin Trading Volumes Fell to a Minimum of 4 Years

Latest articles

Financial Market News

US Government Shutdown: Assessing Economic Impact and Recession Risks

The recurring spectre of a government shutdown has once again loomed over the United States, prompting concerns about its potential economic consequences. The shutdown may occur this weekend unless lawmakers agree on spending levels and whether to give more aid

Indices

S&P 500 Analysis: Price Reaches The Edge of Abyss

Investors in the US stock market have serious reasons to worry: → The likelihood of a shutdown of government agencies is becoming more and more real. It could happen as early as next week if a budget agreement is not reached

Cryptocurrencies

Bitcoin Cash Analysis: Promising Resistance Breakout

Yesterday, the head of the SEC regulator, Gary Gensler, answered questions for 4 hours before the Financial Services Committee of the US House of Representatives, which, among other things, related to cryptocurrencies. What has become known: → on the eve of

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.