With the number of cryptocurrencies in the market today, there’s likely to be plenty of days when one of the many make a move against the grain, but it’s of greater significance when it’s one of the majors.
Bitcoin has continued to be the frontrunner, though we could see investors begin to get impatient, with Bitcoin having failed to break into unchartered territory for a number of days now. In contrast, Bitcoin’s major rival Litecoin has made record highs on consecutive days, with Ripple also making a move in the first half of the week, having lagged behind the rest of the majors in recent weeks.
While the sheer number of cryptocurrencies has had a limited impact on appetite for Bitcoin itself, the recent direction suggests that the Bitcoin rally could be running out of steam. It’s somewhat dangerous to make such a prediction, particularly when considering how it has performed over the last 4-6 weeks and when considering the fact that Bitcoin miners continue to be tied into the Bitcoin world having spent significant capital investment on mining equipment in recent years.
The arrival of the futures market could have contributed to the latest Bitcoin pause, with investors likely to be assessing the impact of the futures market on the value of Bitcoin and whether the day one frenzy could shift from net longs to net shorts.
Perhaps the CME Group’s Bitcoin Futures launch on 18th December is of greater influence on the direction of Bitcoin this week. Following the bounce in Bitcoin’s value upon the launch of the CBOE Bitcoin futures, there may be an expectation of a similar move on 18th, leaving investors looking for returns elsewhere ahead of the launch.
We could also be seeing the effects of regulatory talk on Bitcoin, with regulators continuing to voice their concerns over Bitcoin
There are a number of factors to consider, but the most likely explanation to the current holding pattern is the surge in appetite for Ripple and Litecoin in particular. There are some cheap alternatives out there that have yet to deliver returns similar to that of Bitcoin in spite of perhaps having better blockchain technology than Bitcoin. There’s been plenty of news on Litecoin’s transaction speeds, the ability to handle a significantly larger number of transaction, all of which comes at lower fees. Then there is the news of Ripple placing 55bn of its more than 60bn XRPs into escrow.
Bitcoin’s going to need to make a move soon to avoid a shift in sentiment, which could be more damaging today than before Sunday, with the short selling now all the more easy with the CBOE’s Bitcoin futures.
Litecoin may have been at the mercy of Bitcoin, with the direction for the two largely correlated, but when considering the possible negatives for Bitcoin, the correlation is going to need to break if Litecoin is going to be considered a force to be reckoned with.
Ripple has been in its own world and provides a very different technology on its blockchain, but today’s splash and breakaway from the pack does seem justified, particularly now that fears of the market being flooded with Ripple owned XRPs have been put to rest.
It’s too early to be writing off Bitcoin, but perhaps the sheer number altcoins has led investors to search for returns elsewhere. One thing is for sure, speculative investors are not the sticky type and are just as likely to come back to Bitcoin if there’s a hint of a rally.