Buyers beware as BTC, LayerZero, Stellar (XLM), Litecoin prices rebound

Cryptocurrency
prices
bounced
back
on
Saturday
as
investors
rushed
to
buy
the
dip.
Bitcoin
(BTC)
led
these
gains
after
it
bounced
back
to
$58,000
from
its
weekly
low
of
$53,530.
Other
top-performers
were
tokens
like
LayerZero
(ZRO),
Stellar
Lumens
(XLM),
and
Litecoin
(LTC),
which
rose
by
double-digits
from
their
lowest
level
this
week.

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Why
Bitcoin
and
altcoins
are
recovering

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There
are
three
main
reasons
why
Bitcoin
and
other
altcoins
are
bouncing
back.
First,
there
are
rising
odds
that
the
Federal
Reserve
will
start
cutting
interest
rates
earlier
than
expected
after
Friday’s
jobs
numbers. 

The
data
revealed
that
the
economy
created
206k
jobs
in
June,
beating
the
estimated
190k.
While
this
was
a
solid
report,
other
numbers
pointed
to
the
softening
of
the
American
economy
as
the
unemployment
rate
rose
to
4.1%
and
wage
growth
slowed. 

Two
separate
reports
by
the
ISM
showed
that
the
economy
was
slowing.
The
manufacturing
PMI
dropped
to
48.5
in
June
while
the
non-manufacturing
PMI
dropped
to
48.8,
meaning
that
the
two
were
in
a
contraction
zone. 

Therefore,
some
analysts
believe
that
the
Fed
will
deliver
its
first
rate
cut
in
its
September
meeting.
Still,
there
is
a
risk
that
inflation
will
remain
steady
for
longer,
which
could
push
the
Fed
to
maintain
rates
higher
for
longer.
Bitcoin
and
other
altcoins
do
well
when
there
is
hope
that
the
Fed
will
cut
rates.

Second,
the
tokens
rebounded
after
Joe
Biden’s
interview
with
George
Stephanopoulus,
in
which
he
confirmed
that
he
would
stay
in
the
race.
Most
experts
believe
that
Trump
will
win
if
Biden
remains
in
the
race.
Trump
is
seen
favourably
by
crypto
investors
since
he
has
supported
the
industry.

Third,
these
tokens
have
risen
as
investors
buy
the
dip.
In
most
cases,
investors
and
traders
are
always
quick
to
buy
the
dip
when
an
asset
crashes
hard
in
a
short
period.
This
rebound
is
happening
after
Bitcoin
formed
a
hammer
pattern,
as
shown
in
the
chart
below.

Dead
cat
bounce
risks

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Bitcoin
price
chart

Still,
despite
these
gains,
there
are
reasons
to
be
careful.
First,
this
rebound
could
be
part
of
a
dead
cat
bounce.
This
is
a
situation
where
assets
in
a
freefall
bounce
back
briefly
and
then
resume
the
downward
trend. 

Bitcoin
has
shown
some
dead
cat
bounces
several
times
this
year.
For
example,
in
June,
the
coin
tumbled
to
$58,437
and
then
quickly
rebounded
to
over
$62,000.
These
gains
were
short-lived
and
the
coin
resumed
the
downward
trend. 

Second,
technicals
are
not
supportive
of
a
sustained
Bitcoin
and
altcoins
rally.
The
chart
above
shows
that
Bitcoin
formed
a
giant
double-top
chart
pattern
at
around
$72,000.
In
most
cases,
this
is
one
of
the
most
bearish
patterns
in
the
market. 

By
measuring
the
distance
between
the
head
and
the
neckline,
we
can
estimate
that
Bitcoin
will
drop
to
about
$44,500.

Bitcoin
has
now
retested
the
double-top’s
neckline.
A
break
and
retest
is
one
of
the
most
popular
continuation
signs
in
the
market.
Worse,
the
coin
remains
below
the
200-day
Exponential
Moving
Average
(EMA).

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Therefore,
there
is
a
likelihood
that
Bitcoin
will
resume
the
downward
trend
in
the
next
few
days.
If
this
happens,
other
altcoins
like
Litecoin,
LayerZero,
Stellar
Lumens,
and
Chainlink
will
drop
as
well.
The
same
will
happen
among
other
altcoins
like
Pepe,
Internet
Computer,
and
Hedera
Hashgraph.

Besides,
there
are
some
fundamental
challenges
as
well.
Data
shows
that
Bitcoin
balances
in
exchanges
has
continued
to
rise
because
of
Bitcoin
miners
capitulation,
sell-off
by
the
German
and
US
governments,
and
signs
that
Mt.Gox
wallets
are
moving
coins
to
exchanges.