Cryptocurrencies jump after last week’s sharp decline
In the first week of the year, the prices of cryptocurrencies jumped as traders started betting on their revival. The rally led to the price of Bitcoin and Ethereum reaching highs of $4225 and $156, respectively. Then, last week, the prices started to drop and the two currencies reached lows of $3470 and $113. Yesterday, the prices jumped again, a sign that volatility is increasing. The combined market cap of the currencies tracked by Coin Market Cap is now $123 billion.
The currencies have always been volatile, which is a major reason why they have not been widely accepted. Retailers and other sellers are afraid of accepting a currency whose price can fluctuate by double digits within a day. As a result, the consensus among close cryptocurrency watchers is that unless the volatility is dealt with, the currencies will not have mainstream uses. This is why the recent movement from cryptocurrencies to stablecoins could change the industry.
Another way that cryptocurrencies could gain wide acceptance is through regulators. The Securities and Exchange Commission (SEC) will play an important role in this. A good way to start would be to accept ETFs that have been proposed. While the process will take a long time, there is a possibility that the regulator will accept them. In the past, it took years before the SEC allowed gold-backed ETFs.
The price of ETH has moved from last week’s low of 113.59 to a high of 130.5. The current price is above the short and medium-term EMAs while the RSI is trading slightly lower than the overbought level of 70. In the short term, the price could decline to test the previous lows of below 120.