Bitcoin held above $10,000 for a few days, and that's the big good news. In the last 24 hours, the reference crypto currency has added about a percent and clung to $10,400.
The ability to balance above the threshold contributes to the growth of altcoins. So, top Ethereum (ETH) has grown by 30% in the last 7 days. Other coins also show steady growth. By the way, the increase in the value of alternative crypto currencies leads to a decrease in the BTC domination index, which has already fallen to 61.7%.
It is interesting to understand what contributed to the sharp bounce of the benchmark currency by $500, while it was threatened with a massive correction after a failed attempt to take $10,000.
The crypto community agrees that the reasons should be sought in the statements of the Fed's head. Market participants have concluded that the U.S. Reserve System takes the crypto currency as a serious threat to the status of the dollar as a global reserve currency. In addition, Powell's speech may have hinted at creating his own rival for the Chinese digital yuan, which again would have been logical, given how tightly the controls with Libra and TON have been.
Nevertheless, as much as we would like to believe that there is a steady growth and new highs ahead of us, it should be noted that the rally is again based on assumptions and speculation. Now we can see that the growth momentum is fading. In addition, we did not observe a leap of tens of percent typical of the cryptographic market, as was the case after the PRC head's statement on the development of the Blockchain.
That is now the reaction is more muffled, while idling around the current levels or new attempts by bears to push Bitcoin below the threshold can turn out to be quite significant profit taking. This assumption may be supported by data from the Bitcoin Fear and Greed Index, which is currently at 65: the highest value since early August 2019, which corresponds to greed. The RSI index is also in the oversold area. In combination with other factors, this can trigger a market reversal.
Whatever price fluctuations in the short term, in a broad time frame the intentions of central banks to launch digital analogues of national currencies are considered as a positive scenario for existing cryptocoins. Market participants believe that the dissemination of the national crypto on a systemic level will contribute to the growth of demand and institutional investors' confidence in the existing market leaders.
However, there is another position: central banks and governments are rushing to lead the new trend in order to push as many competitors as possible out of the market. In this scenario, we will see a serious tightening of the process of converting crypto currencies into fiat in the near future, as this is the main weapon of central banks in a decentralized environment.
Over the years, the crypto market has not become an independent monetary system where crypto currencies would be given their own value without a final peg to the dollar. It's sad, but true: without the ability to use traditional money exchange, crypto currencies will quickly begin to lose their appeal.