Cryptocurrency market has picked up momentum to push higher across the board and multiple cryptos have hit new all-time highs on Wednesday on the back of a crypto market frenzy, hype-fuelled trading and improved investor confidence.
The market-wide upward traction follows hype-fuelled Dogecoin’s incredible rally yesterday which drove up the meme-inspired coin’s market cap above US $80 billion.
Further consolidating its recovery from the late April price crash, Bitcoin (BTC) has climbed above US $58,000 level after the recent pullback. It has seen steady gains over the last few days and is likely going to bump against the massive psychological resistance of US $60,000 soon.
Succeeding to hold constructively above US $60,000 could validate bullish potential and precipitate an impulsive surge to challenge the yearly high of near US $65,000.
Meanwhile ether (ETH), the second-largest cryptocurrency by market cap, has pushed above the US $3,500 level, currently holding steady around US $3,520. Overall, it has been a remarkable week for ether.
Elsewhere, many of the major altcoins have spiked double-digit percentage points to set new records today.
As of press time, Bitcoin (BTC) is changing virtual hands at US $58,100, Ether (ETH) at US $3,520, ripple (XRP) at US $1.66, Binance Coin (BNB) US $648, cardano (ADA) at US $1.63, Dogecoin (DOGE) at US $0.61, ChainLink (Link) at US $48, UniSwap (UNI) at US $42 and Polkadot (DOT) at US $40.
The parabolic surge in the market is mostly fuelled by the fact that many traders, especially newcomers do not want to miss out on any buzz that stems from the kinetic momentum and hype, especially Elon Musk’s upcoming host event which has propelled Doge up, Ethereum’s recent appreciation, and overall investor confidence.
However, such artificially inflated prices can easily leave a lot of newbie investors hemorrhaging losses if they wade into the risky assets imprudently.
Just three weeks ago, cryptocurrency holders were fumed as a sudden constellation of risk events triggered the forced liquidation of leveraged bets, wave of selling with pressure across the board. The flash crash made many investors cautious to buy into an ongoing crash, reducing bid liquidity in the market.
Many crypto exchanges allow traders to trade on a margin account (using leverage), which means that they can use a relatively small amount of money upfront to borrow the rest in order to hold large amounts of digital assets. Although the leverage magnifies profits if the price goes in the favorable direction (depending on short or long orders), it leaves traders in a much more vulnerable position if price goes in the wrong direction.
The vicious sell-off last week was a costly lesson for the rookies who were stuffing their wallets with ‘upside momentum’ crypto coins with a false sense of security, thinking their holdings could only climb.