- The correlation between Tezos (XTZ) and Bitcoin (BTC) is high in the crypto markets.
- As Bitcoin looks set to revisit previous support zones below $6,900, XTZ has the 200 Daily MA acting as much needed support.
- The recent announcement of a Tezos token backed by BTC further proves that the future is bright for the project.
On this Good Friday, Bitcoin (BTC) has in the last few hours lost the support zones of $7,200 and $6,900. The King of Crypto is currently trading at $6,800 (Binance rate) and looks set to test previous support zones of $6,600, $6,500, $6,200, $6,050 and possibly $5,800. It is with the current bearish market environment, that Tezos (XTZ) is also in the red. The coin is currently ranked 10th on Coinmarketcap and has undergone a 12% drop in the last 24 hours. At the time of writing this, XTZ is trading at $1.86 and looks set to follow BTC on a similar downward trajectory.
XTZ/USD 200 Daily MA Offers Crucial Support
The reason for the expected drop is that the correlation between XTZ and BTC has always been known to be high. It has further been analyzed by the team at CoinPredictor as having a value of 0.84. This value is derived from a scale of -1 and 1 with the latter value being the strongest correlation to BTC.
Further checking the daily XTZ/USD chart courtesy of Tradingview, we find that XTZ’s current value of $1.86 is below both the 50 (white) and 100 (yellow) moving averages. The coin is clearly in bearish territory. However, we can see that the 200 (green) daily moving average provides a strong support zone for the price of the coin at around $1.60.
Given the high daily MFI value of 73, it is worth mentioning other notable support zones. They include:
Launch of tzBTC
Earlier on in the week, the Bitcoin Association Switzerland announced the launch of Bitcoin backed token on the Tezos blockchain. Aptly named tzBTC, the token uses a smart contract to ensure that its value is the equivalent of BTC in real-time. The team further explains how it will function through the following statement.
The governance mechanism of the tzBTC contract allows for the compliant and secure issuance of BTC-backed tokens on the Tezos blockchain. The various responsibilities are managed by several key stakeholders: the Association, Keyholders, Gatekeepers, and Users.
The Association monitors the tzBTC issuance process whereas Keyholders are responsible for the custody of BTC. Additionally, Gatekeepers act as financial intermediaries and often serve business-to-consumer markets. Users buy, sell and hold tzBTC. More on this can be found here.
With the correlation of Tezos and Bitcoin (BTC) set at 0.84, the 200 daily moving average acts as crucial support for XTZ. As the bearish environment set by Bitcoin and the global impact of the Coronavirus continues to prevail, XTZ has several support levels all the way to $1. The coin also has a bright future fundamentally, as more projects continue being built on its network. That being said, it might be a few more days before the crypto markets are in bullish territory once again.
(Feature image courtesy of Josh Adams-Ford on Unsplash.com.)
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.