The 45-day rally in bitcoin is finally over. Prices hit a low of $5,426 three days ago. We have since bounced back but are still far away from the all-time high. Somewhat surprisingly Litecoin has gained ground during this turmoil.
Bitcoin Rally Ends
The long bitcoin rally is over, at least on the daily charts. Prices had a sharp correction of $2,361 dollars in the five days after segwit2x was cancelled. As explained previously, segwit2x was a plan to increase the maximum block size from the current 1mb to 2mb, thereby allowing more room for transactions and lower fees.
With no plan to tackle the high fees problem in the near-term, some market participants are fleeing from bitcoin to other coins. The primary beneficiary here was bitcoin cash (BCH), which saw its prices increase five-fold from 0.08 BTC to peak at over 0.4 BTC during the weekend. The increased price, in turn, led to a rush of bitcoin miners to bitcoin cash, further exacerbating the problem with the high fees and the clogged mempool.
The average bitcoin fee to send a transaction rose to over $16 yesterday, compared with $0.30 for bitcoin cash. The bitcoin mempool is at over 100 mb right now, nearing the all-time highs seen a few months ago. The ‘mempool’ holds all broadcasted transactions that are not yet included in a block. After a price drop to 0.2 BTC and a major mining difficulty increase in bitcoin cash, miners are switching back to BTC. This could help ease the problems somewhat. Currently, the mining hash power is split 92% vs 8% in favor of bitcoin.
Technically BTC/USD is now back in a range on the dailies. A breakout below the $5,426 swing low is needed to start a new downtrend. A move beyond the all-time high at $7,887 would re-start the rally. On the longer-term weekly and monthly charts, BTC is keeping the bullish bias.
Litecoin Breakout Fails
Litecoin initially broke out from its range, only to fall back in two days later. While prices are higher, to call a new rally we need to see a sustained move above the new swing high at $66.69 dollars.
On the lower end, the bears need a breakdown below the $53.25 swing low. This could start a new downtrend in LTC prices. There is no change in trend on the longer-term charts. The weekly is still range-bound while the monthly is looking bullish.
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