Cryptocurrencies Rally on Knee-Jerk Reaction to Argentina’s Default
Most cryptocurrencies rallied yesterday on what appears to be a knee-jerk reaction to Argentina’s bond default. Standard and Poors declared the country in default after talks between investors and the socialist government broke down. Credit Default Swaps used to protect against a default in Argentine government bonds in the next 3 months spiked to over $4 million to secure $10 million.
Bitcoin gained 25$ yesterday and more today, moving up from a low of $555. Bitcoin’s silver Litecoin, rallied from a daily low of $6.97 per coin to $7.66. Litecoin is currently quoted at $7.60. Peercoin, another popular altcoin, gained close to 15% when it rallied from a daily low of 1.05 to hit a high of $1.20 yesterday. Since then however PPC prices have tapered off and after a retracement to $1.12 the alt is now trading at $1.17.
Bitcoin Triple Bottoms at $550
In bitcoin, the rally was somewhat supported by the $550 area. Prices made a triple bottom in the crypto after reaching a low of $555 in the early Asian session on Thursday. From here, everyone’s favorite cryptocurrency rallied to gain 25 points yesterday and further 9 points today, eventually reaching $589. Prices are currently trading just shy of the daily high at $585 per coin.
It’s hard to say just how much of the rally was due to technical reasons (a bounce of the $550 area) but if the move up is just a knee-jerk reaction by crypto traders to the turmoil in Argentina, it will likely not be sustainable. The bitcoin penetration in Argentina was very low even at a yearly inflation rate of 40%. This is unlikely to change going forward.
We now have two defined brakeout points for BTC. On the high end, a decisive brakeout above $600 may carry prices higher toward $633. Higher up, we find a small resistance at $650 followed by the important resistance at the June 3rd swing high of $667. On the lower end, a retest of the triple bottom we just made will likely result in a break lower. If $550 gives way, we will be looking for the next level of support near the round psychological level at $500.