Can Bitcoin defy a strong dollar to crack $12K?
Pressure is building in the crypto market, with Bitcoin lingering below $12K as positive network metrics point towards further upside.
Along with Bitcoin, large-cap altcoins including Ethereum and XRP have finished the week in much the same place they started. This stagnation could be attributed to a rebound in the dollar, which found support last week and began to recover from its recent downturn.
Meanwhile, the NASDAQ and S&P 500 have returned to record highs, leading bitcoin traders to hope the recent correlation between stocks and cryptocurrency hasn’t fizzled out.
This Week’s Highlights
- Litecoin Spellbound by Mimblewimble
- Bitcoin Network Metrics Point to More Upside
Litecoin Spellbound by Mimblewimble
The silver to Bitcoin’s gold has lagged behind this year, gaining less than 50% since January while Bitcoin has surged over 60%. This could now be changing, with Litecoin rising over 4% on the week as Bitcoin struggles to make 1% gains.
As Litecoin founder Charlie Lee pointed out in a tweet last Wednesday, the number of transactions and addresses on the network has grown rapidly, and the much-awaited Mimblewimble upgrade is now on the verge of a testnet launch. This privacy protocol, aptly named after the Tongue-Tying Curse from Harry Potter, promises to bring more anonymity to Litecoin transactions.
Accredited investors appear to be taking note of the progress, with Grayscale’s newly launched Litecoin Fund trading at a 753% premium to the underlying asset, according to data from Arcane Research.
Bitcoin Network Metrics Point to More Upside
Although the price of Bitcoin remains range-bound, network metrics reflect growing interest in the cryptocurrency.
The number of Bitcoin held on exchanges has fallen to a 21-month low, according to data from Glassnode. This is widely seen as a bullish sign as it suggests traders are anticipating a continuation of the recent uptrend, and moving bitcoin to long-term wallets to ride out the next few months.
At the same time, Bitcoin’s hashrate is approaching all-time highs. This measure of network processing power indicates network health and is thought to have a long-term correlation with price.
The Week Ahead
The recent consolidation is characteristic of crypto bull trends, with periods of relative calm punctuated by sudden price pumps. If this pattern plays out again as it did before the break of $10K, we could expect a sustained rally once the price closes convincingly above $12K.
Professional traders on the Chicago Mercantile Exchange (CME) however, are expecting downside. The latest Commitments of Traders Report (COT) shows that most institutions are betting on a downwards breakout, and have opened short positions accordingly.
