Second biggest cryptocurrency on market is rising, but it might be short-term move
The sudden recovery of the market yesterday was a pleasant surprise ahead of Christmas, as Bitcoin, Ethereum and most digital assets on the market showed us a solid 3-4% price spike that put them at local resistance levels. However, there are some signals showing the temporary nature of the recovery.
Potential reversal of DXY
The movement of the U.S. dollar is one of the deciding factors for both traditional and cryptocurrency markets as the world’s biggest currency brings doom to markets whenever investors push it upward.
According to the DXY index’s movements on the market, there is a good chance of a reversal or a consolidation, which would still bring the market down as the strengthening of the dollar equals the weakening of stock assets and digital currencies.
Fed chair Jerome Powell is not backing down and is ready to get inflation down to the target that was set by the regulator previously, whatever it takes — even if the collapse of the market becomes part of the collateral damage.
Such tendencies instilled fear in investors and made them realize that the rate hike cycle is not over, and we might face another year of pain on both digital and traditional markets, which explains increased outflows that brought markets down at the beginning of the week.
As surprising as it may sound, the U.S. dollar was also guilty of pushing Ethereum’s value despite being on the verge of a potential retrace. The second biggest cryptocurrency on the market swung toward the $1,200 price threshold and gained a foothold above it, despite the move downward that happened at the beginning of this week.
The price spike on the market was followed by the insignificant rise in the burning volume on the network. According to ultrasound.money, Ethereum’s issuance offset reached 0.98x, from 0.96x witnessed previously. Unfortunately, the overall burn rate of the cryptocurrency remains at an inflationary level.
Chainlink’s long-awaited launch
The partnership with Arbitrum that U.Today previously covered was the long-awaited event in the Chainlink community, as it would pull the project’s fundamental value upward. Coincidentally, LINK has reached the fundamental support level from which it may start its new path upward.
The Chainlink Automation on Arbitrum One will enable developers to build scalable and low-cost decentralized applications with full automation. Numerous projects have been actively implementing Chainlink’s solutions, including Armadillo, COTI, DefiEdge and others.
At press time, Link is trading at $6; the price level acts as a handbrake for an asset that has been moving in a continuous downtrend for the last 20 days, losing more than 20% of its value. The bounce from the $6 price threshold would be the sixth time LINK enters a reversal rally from the same price level.