Earlier today, on Oct. 15, the price of Bitcoin surged from $6,150 to $6,700 on most major fiat-to-cryptocurrency exchanges including Coinbase, Bitstamp, and Kraken.
Although the price of the dominant cryptocurrency surpassed the $7,500 mark on Bitfinex, the increase in the value of Bitcoin on Tether-enabled exchanges such as Bitfinex and OKEx were triggered by the sell-off and drop in the value of US dollar-backed stablecoin Tether (USDT).
Tether Sell-Off, Bitcoin Surge
Throughout the past 48 hours, Tether experienced one of its largest sell-offs to date. The rapid drop in the value of USDT can be attributed to three major factors:
- Investors selling USDT for better stablecoins (audited, regulated) like Gemini USD and Pax
- Crypto traders selling USDT to buy Bitcoin and Ethereum.
- Tether banking issues as Alex Kruger explained as traders can’t redeem USDT
As BTC reached $7,500 on Bitfinex, the real price of Bitcoin on regulated fiat-to-cryptocurrency trading platforms rose to $6,700. However, contrary to popular belief, the organic rise in the price of Bitcoin over the last 12 hours was not triggered by Tether.
On cryptocurrency-only exchanges, BTC surged significantly from $6,150 to $7,500 because the value of Tether fell against the US dollar. But, on fiat-enabled exchanges, the drop in the price of USDT did not have any impact on the order books.
Hence, the significant premium of Bitcoin on Tether-enabled exchanges and the rise in the value of BTC on fiat-to-cryptocurrency trading platforms was merely a coincidence.
Previously, Danny Les, a respected cryptocurrency trader and head of blockchain innovation at Sync Money, said that a final shakeout will be in play before BTC initiates a serious mid-term rally:
“Personally I suspect that there will be more blood before any kind of serious rally up. Volume and price, certainly in Bitcoin’s case need to pick up before we get to near Christmas otherwise we will see the year out with a very negative sentiment attached.”
Given that BTC experienced a relatively large sell-off last week which led the price of BTC to dip below the $6,200 mark, it is possible that the asset could begin engaging in a major rally in the weeks to come.
Bitcoin has broken out of its long-term downtrend resistance after surpassing $6,700. Although the market still needs to see BTC reaching the $6,800 resistance level in the next 24 to 48 hours to confirm a bullish short-term price movement, analysts have expressed their optimistic viewpoint on the short-term trend of the market.
Crypto Rand, a prominent technical analyst in the cryptocurrency space, stated:
Well, the great news are playing out! #Bitcoin breaking up the main downtrend resistance. Adding a new volume spike confirming the end of the downtrend.
— Crypto Rand (@crypto_rand) October 15, 2018
Flood, another recognized cryptocurrency trader, emphasized that with record low volatility and two months of stability, BTC is likely to have hit its bottom.
Calling the bottom on $BTC here. Some longs unfilled at 6k-5800. If you ain’t long you’re wrong.
— Flood [Deribit] (@ThinkingUSD) October 14, 2018
The volume of Bitcoin, Ethereum, and XRP has started to pick up on most cryptocurrency exchanges, and considering positive developments in the crypto and blockchain space, investors expect the market to initiate a promising short-term movement to the upside.
Cover Photo by Breno Machado on Unsplash