26 December 2020
Crypto News: After A Massive Rally Last Week, Bitcoin (BTC), and Overall Crypto Market Enters Correction
Bitcoin (BTC) has a record run last week as the world’s largest cryptocurrency surged past $20,000 levels hitting its new all-time high above $24,000 levels on Sunday, December 20.
Bitcoin made record 25% gains in the last week on the backdrop of massive institutional inflows coming to the cryptocurrency. However, the Bitcoin (BTC) price has finally corrected on Monday as part of the market-wide correction. The overall cryptocurrency market has tanked over 5% losing nearly $50 billion in market cap.
The latest correction in the crypto market comes with the fears of the newly found fast-spreading COVID-19 strain in Britain. After a major alert on Sunday, the U.K. government has restricted movement with stricter regulations and restrictions expanding globally.
On Monday, December 21, the volatility in the European and the Asian markets surged followed by major corrections. Of lately, Bitcoin and the overall crypto markets have been moving in a similar correlation to the traditional stock markets. It happened during the market crash in March 2020 wherein both – traditional stock markets and crypto markets corrected massively.
Earlier in crypto news, before the correction swept the markets, JPMorgan analysts said that any slowdown in institutional inflows to Bitcoin funds can put breaks on the Bitcoin (BTC) price rally.
In a report by Bloomberg, the JPMorgan analysts specifically cite the Grayscale Bitcoin Trust (GBTC) which has grown speedily in 2020. From managing $2 billion worth of assets at the beginning of 2020, the GBTC Bitcoin fund has more than $13 billion in assets under management. This is a massive 550% jump in a single year.
JPMorgan chief strategist Nikolaos Panigirtzoglou writes that GBTC has seen over $1 billion inflows per month during the ongoing quarter. The strategists said:
“It is hard to avoid describing Bitcoin as “overbought,” the flows into the trust are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics. A major slowdown in those flows would boost the risk of a Bitcoin correction akin to the one in the second half of 2019.”
While as the Bitcoin (BTC) price corrects today, business intelligence firm MicroStrategy continues with its bitcoin buying spree. The company has announced a fresh purchase of over 29,000 Bitcoins for an aggregate price of $650 million.
With the latest purchase, MicroStrategy takes its total BTC holdings to over 70,000 with a total investment of $1.125 billion for an average BTC purchase price of $15,964 per bitcoin.
Michael J. Saylor, CEO, MicroStrategy said:
“The acquisition of additional bitcoins announced today reaffirms our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value.”
“We believe the proactive management of our balance sheet, combined with the improved revenue and profitability performance of the Company, have been significant factors in the recent appreciation in our stock price.”
In another development, digital asset manager Grayscale has temporarily halted investments for its Bitcoin (BTC) and Ethereum (ETH) funds. The halts come as the six-month lock-up period for the shares of GBTC comes to an end.
Grayscale spokesperson Corey Law told Decrypt: “We’re just at that point in the year where those windows the public window will be closing. And then the private window will be open”.
Major Correction In the Altcoin Market
In other Crypto News, apart from Bitcoin (BTC), there’s a heavy correction seen in the altcoin space which ultimately increases Bitcoin dominance to above 66% in the overall cryptocurrency market.
After a rally past $650 last week, Ethereum (ETH) corrects 5% in the last 24 hours but still manages to hold above $600 levels which is key support. If the buyers can successfully hold these levels, the first resistance on the upside is $625. Similarly, if the ETH price corrects below $600, the first support on the downside is $580.
One of the cryptocurrency traders notes that Ethereum’s weekly Stoch RSI has nailed previous tops and is looking bearish once again. This we can see a decent correction going further from here.
How Is Ripple Doing?
Ripple’s XRP also continues to trade sideways and has slipped below $0.50 levels as of writing this article. In a recent development, blockchain startup Ripple notes that the U.S. SEC is planning to sue the company on the alleged sales of unlicensed securities.
Ripple CEO Brad Garlinghous himself told The Fortune that the regulator is looking to file the case in the coming days. “It’s not just Grinch-worthy, it’s shocking,” said Garlinghouse. “It’s an attack on the entire crypto industry and American innovation.”
Another altcoin similar to Ripple – Litecoin (LTC) – made considerable gains during last week’s crypto market rally. The LTC price surged all the way to $123 before finally correcting on Monday. However, LTC still continues to hold itself above $100 despite a 10% correction.