Bitcoin (BTC/USD) Stabilizes After Litecoin (LTC/USD) Flare
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Bitcoin, BTC/USD, Litecoin, LTC/USD Talking Points:
- A rush of excitement enveloped the crypto world for about 15 minutes earlier today, on an announcement that Wal Mart was going to begin accepting Litecoin as payment.
- This report was walked back about 15 minutes after it was issued; but not before Litecoin was able to jump by about 35%, and this was a run that even showed in Bitcoin as BTC/USD pushed up for a resistance test.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
The week started with a jolt of excitement as news circulated that Wal Mart had announced that they were going to start accepting Litecoin cryptocurrency as a form of payment.
This announcement came completely out of the blue, but it seemed as though it could’ve been a strong endorsement for the crypto space with one of the world’s largest retailers beginning to accept payment in the medium.
Only problem: The report turned out to be fake, and has later been walked back both by Litecoin and by Wal Mart, leaving the cryptocurrency to fall back to earlier levels after a flare that accounted for about 35% in around 15 minutes.
There’s a lot to unpack here, which I’ll get into at after the chart.
Litecoin (LTC/USD) Four-Hour Price Chart
Litecoin Volatility Flare & Repercussions
The positive sign taken from this morning’s volatility is that we have a pretty clear signal of what can push crypto markets higher, and that’s wider-scale adoption. Wal Mart backing a coin, even Litecoin, can bring a massive impact in a very short period of time. Case in point, Litecoin gained more than 35% in about 15 minutes on a single-source report.
So, the volatility is there and there remains a considerable force on the sidelines that can push a significant amount of capital into the space at a moments notice on news of some bullish factor.
The other side of the argument: This is the type of thing that regulators generally look to control, and with such an emblematic example of this showing up this morning, there’s yet another case for regulators to investigate when looking to better manage cryptocurrencies.
This can be a good thing, too, especially for those with long-term crypto aspirations, as regulation feels unavoidable on a long enough time line.
But, case in point to the excitement factor: Bitcoin put in a strong move with similar hues to the Litecoin breakout earlier this morning. Of course, no announcement was made on Bitcoin, but the seeming fact of Wal Mart accepting Litecoin could be seen as a greater step for Bitcoin adoption, as well.
That bullish flare in Bitcoin ran up to find resistance at a key level, a price that I was previously plotting as support, showing around the 46,847 level on the chart, derived from a Fibonacci retracement taken from the Jan 22-April 14 major move. Another support zone lurks below, confluent between two Fibonacci levels plotted at 41,628 and 42,588.
Bitcoin Four-Hour Price Chart
--- Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.