Following Christmas and a strong corrective rally on Christmas Eve, the crypto market lost over $18 billion within a 48-hour period.
The Bitcoin price dipped below the $3,800 mark after a promising price surge to $4,300 and the Bitcoin Cash price suffered a large decline from $230 to $170 within a one-week span, losing 26 percent of its value against the U.S. dollar.
Throughout the past week, investors in the cryptocurrency market have been generally positive on the short-term trend of Bitcoin and other major crypto assets, given the dominant cryptocurrency’s strong recovery to the mid-$4,000 region.
But, many analysts also cautiously suggested that the cryptocurrency market is still in a bear market and while it may be in the last phase of a year-long downtrend, a high level of volatility in a low price range is expected.
On December 21, prior to a rally that allowed the crypto market to add over $40 billion to its valuation, a cryptocurrency trader with the online alias “The Crypto Dog” said that a rally above key resistance levels in the $5,000 to $5,500 range is unlikely in the short-term despite some momentum major crypto assets showed.
The trader wrote:
Bitcoin found support near historical highs at $3,000. Earlier this week, I watched Bitcoin’s volatility and sell volume stall the further its price fell, leading me to wonder if the fabled ‘$3,000 support’ would be front ran. It was. If bulls are able to push past $4500, $4800 is the last bump in resistance that stands in the way before $5,400. At this time I am not anticipating a rally beyond $5,500, nor can I guarantee more relief even past $4,500, though we must not count any scenario out.
For the crypto market to initiate a proper bull rally and a mid-term uptrend, it will have to undergo a several-month-long consolidation and accumulation period during which the value of cryptocurrencies rise gradually against the U.S. dollar.
From August to November, for just over three months, the cryptocurrency market demonstrated a record low volatility rate but it still was not enough to stabilize the market and establish a solid bottom.
$3,120, the lowest point the Bitcoin price achieved in 2018, could be the bottom for the asset. Immediately after the asset fell to $3,120, a large buy wall was created in that price range, allowing the market to recover.
The bottom was most likely reached at $3,120, but unless the market stabilizes and demonstrates gradual momentum, it is not possible to conclusively state that a proper bottom has been achieved.
Until the cryptocurrency market shows a high level of stability in an extended time frame, the market will continue to demonstrate extreme volatility in a low price range.
The volatility of crypto assets shown in the past week was unexpected because of the intensity of the movements on both the upside and downside.
Last modified: June 14, 2020 9:35 AM UTC