Despite not knowing the catalyst behind the sharp rise in the price, various analysts consider that low-volume rallies are bullish traps. If the price broke through the top of the descending channel, it would begin to hit new higher lows.
Some cryptocurrencies with low capitalization have taken the opportunity to gain prominence as volatility decreases in the crypto market. For example, Bitcoin Gold has already gained around 27% over the last 24 hours.
Bitcoin Gold (BTG) is a protocol, open-source project, and cryptocurrency emerging from a Bitcoin (BTC) network fork. In the same way as Bitcoin, it does not depend on any central bank, corporation, or trusted intermediary.
The split originating BTG aimed to introduce changes to the proof-of-work algorithm of the network to prevent using mining ASIC hardware. That cryptocurrency has Bitcoin fundamentals, but people mine it on common GPUs instead of ASICs.
BTG is trading at around USD 24.56 and has accumulated a 27% gain over the last week. While its daily trading volume is above USD 166.38 million, its market capitalization is about USD 429.84 million. It occupies 116th place in the cryptocurrency ranking, according to CoinGecko.
Nobody knows the catalyst behind the sharp rise in the price of Bitcoin Gold. However, several experts think those low-volume rallies are usually bullish traps that a few traders and investors drive.
The several hundred million US dollars of the market capitalization of Bitcoin Gold may seem high at first sight. However, it is easy to manipulate the size of that amount in the crypto space.
Weekly Technical Analysis of the Price of Bitcoin Gold
Despite a significant rally, it is still insignificant for the weekly BTG/USDT chart. There has been a considerable short/medium-term bullish trend in that period, intact since early May 2021.
That drop in the price of BTG may look like a correction following a strong upward push. However, there is not yet a signal that confirms that it has reached the bottom.
The price of Bitcoin Gold currently remains locked in a sharp descending channel. Besides, the recent rally seems to be a mere pause before the price continues in the previous direction.
If the price broke through the top of that channel, it would be a good sign for the bulls. In that way, the value of BTG would begin to hit new higher lows.
The Daily Chart of the Price of Bitcoin Gold
The daily BTG/USDT chart allows seeing excellent behavior of the price thanks to the recent rally. However, after finding resistance at USD 31.50, there was a significant bullish price rejection.
The current observable rally indicates that the short-term trend of the value of BTG is upward. If it reached a new higher low in the next few hours, there would continue to be more buying soon.
However, the weekly chart indicates that no one should be too confident about that movement. Before making an investment decision, it is advisable to review the behavior of the price of BTG.
By Alexander Salazar
