On June 23, the cryptocurrency market demonstrated another minor short-term correction, as $13 billion were wiped out of major digital assets such as Bitcoin, Ethereum, Ripple, Bitcoin Cash, and EOS.
EOS recorded the largest loss against the US dollar amongst major cryptocurrencies, dropping by more than 11 percent overnight. Bitcoin, Ethereum, and Ripple recorded a five percent loss but have recovered slightly since.
Over the past two months, Bitcoin had certain periods of strong momentum on the upside, supported by optimism from the market and positive developments by the institutional side of the industry.
In collaboration with large-scale hedge funds, Coinbase, the world’s largest cryptocurrency exchange, platform, and brokerage have started to build a suite of institutional cryptocurrency products and trusted custodianship for institutional investors, leading Ethereum creator Charles Hoskinson to express his long-term enthusiasm towards the cryptocurrency market.
“What’s often missed by the cryptocurrency is going to die broken record media is that after the next wave of regulation, wall street is showing up to the party with all their locked up capital. That’s tens of trillions of dollars entering the space eventually. Future is bright,” Ethereum co-creator, Cardano founder, and IOHK CEO Hoskinson said.
Still, in spite of optimism from the market and large-scale investors, the cryptocurrency market has continued to perform poorly, struggling to build momentum and sustain stability.
Nick Szabo, the prominent Bitcoin developer and smart contracts developer, stated that the Bitcoin price will continue to decline until it stabilizes and uncertainties in Bitcoin are fully eliminated. Szabo stated:
“Volatility in Bitcoin from temporary uncertainty about its future (vs. both political opposition & crypto competitors), not from its supply limit. As these uncertainties decline its volatility will decline until it reflects more the uncertainty in fiat than its own.”
Since January of this year, Bitcoin has been on a free fall and every time the dominant cryptocurrency tried to secure mid-term momentum and rally past two important support levels at $10,000 and $12,000, bears took over the market and created immense pressure on the downside.
Given that the six-month correction since 2018 is nearly identical to the structure of the correction of BTC in 2014, both BTC and the cryptocurrency market will need to demonstrate stability for several months and undergo an accumulation period before recovering back to the $10,000 region and eventually to the $20,000 mark.
In consideration of the above mentioned scenarios and the 2014-esqe correction of BTC in 2018, it is likely that BTC will fall below the $6,000 mark once again, as it did earlier today, but to the lower end of $5,000 before initiating a mid-term rally towards the end of 2018.
A study released by the American Institute for Economic Research (AIER) has revealed that BTC has been consistently more stable and less volatile than any other major digital asset and cryptocurrency since 2013.
If BTC falls to the lower end of $5,000, it is highly likely that tokens will experience intensified movements on the downside.
Featured image from Shutterstock.
Last modified: May 20, 2020 8:40 PM UTC