DeFi tokens and altcoins move upward when the price of Bitcoin meets resistance near $35,000.
On January 12, the price of Bitcoin (BTC) recovered slightly when it tried to re-enter the $37,000 range, but as of press time, increased sales are pushing the price back to the $32,000 mark.
While the bearish price action may have shaken up new investors who aren’t familiar with Bitcoin’s volatility, the recent 28% drop doesn’t even put it on the list of the five worst setbacks in BTC history. In fact, today’s 20% rebound marked one of Bitcoin’s biggest one-day rebounds.
Daily performance of the cryptcoin market. Source: Coin360
Despite Bitcoin’s rapid 20% rebound, many analysts have expressed caution, warning that the most important crypt currency is not yet out of the woods due to the high funding rate in the futures market and the growing strength of the US dollar index (DXY).
Long-term and institutional investors seem unmoved by the correction and probably believe that it is only a short-term setback.
Goldman Sachs analysts suggested that recent events are a sign that “the market is starting to mature” and that the sector has great growth potential because institutional participation only comprises 1% of the current market.
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Actions seek support
Although Bitcoin and the altcoins experienced a healthy rebound, traditional markets continued to face pressure due to the possibility of continued political unrest in the United States and concerns about the economic impact of the new COVID-19 restrictions.
Signs of a strengthening dollar are putting pressure on global financial markets around the world, and some analysts have even warned that a strong dollar is bad for the price of Bitcoin.
The major indices were under pressure all day and ended up mixed in the closing bell, with the S&P 500 and the Dow slightly up 0.04% and 0.19% respectively, while the NASDAQ closed at 0.08%.
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Altcoins show their strength as Bitcoin tries to find a new trading range
Bitcoin seems to be entering a new range where the $30,000 is the support and the $35,000 level acts as resistance. While this is happening, some altcoins have risen and traders are capitalizing on the stability of BTC by switching to altcoins.
The price of Ether (ETH) rose above $1,000 and at the close of this edition the altcoin was trading at $1,050. Stellar (XLM) also recovered well on Tuesday, as the digital asset gained 22.16%.
The DeFi sector also continued to show strength, as Maker’s governance token (MKR) rose more than 31%. Synthetix (SNX) and AAVE also gained 23%; both recovered to reach new highs for the year.
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The capitalization of the crypto currency market is now $924.5 billion and Bitcoin’s dominance rate is 68.4%.