Bitcoin lost its newfound momentum on January 26 as naysayers joined profit-takers in driving prices lower.
Trader: Bitcoin dominance has peaked
The week had begun on a more positive note as stocks climbed and the dollar weakened, providing the kindling to reignite a BTC/USD pair which had lost steam late last week. At press time, however, $32,000 was in play after Bitcoin fell to $31,000, which held as support.
“The critical area for #Bitcoin is still the $30K zone on the downside and the $34K barrier on the upside. In between is just range-bound construction,” popular trader Michaël van de Poppe summarized about the current environment.
Van de Poppe noted that $30,000 had already seen multiple tests, and that a further attack could therefore open up much lower levels if it were to fail. In particular, he eyed the zone between $24,000 and $25,000, in line with his prediction that the Bitcoin spot price will dip to meet its rising 21-week moving average.
On the topic of altcoins, as Ether hit a new record high of $1,475, he added that Bitcoin would not be rising to beat its market cap dominance peak in the visible future. That compares bitcoin’s total market capitalization to the total market cap of all cryptocurrencies.
“#Bitcoin dominance topped out in December,” he tweeted on Monday.
“Probably some slight upwards correction coming in February/March, after which a further downwards fall on the Dominance chart will occur in March and onwards. The top on Dominance is in.”
Governments line up the “FUD”
Bitcoin meanwhile found itself caught up in a fresh round of doomsday narratives from traditional finance and governmental sectors this week.
Despite major buy-ins from institutions continuing, and Rothschild Investment Corporation announcing that it had exposure to one of them—the Grayscale Bitcoin Trust (GBTC)—noises from lawmakers remained firmly bearish.
Speaking to the World Economic Forum, Andrew Bailey, governor of the Bank of England, claimed that cryptocurrencies in their current form did not have long-term staying power.
“Have we landed on what I would call the design, governance and arrangements for what I might call a lasting digital currency? No, I don’t think we’re there yet, honestly. I don’t think cryptocurrencies as originally formulated are it,” he said, quoted by Reuters.
“…The whole question of people having assurance that their payments will be made in something with stable value… ultimately links bank[s] to what we call fiat currency, which has a link to the state.”
Just as hands-off was Russia, which this week banned government agencies and employees from using or owning cryptocurrencies.
Both episodes come weeks after the European Central Bank (ECB) and International Monetary Fund (IMF) both added to existing skepticism of cryptocurrency, alleging that they are used for illicit activity.