Over the past 24 hours, Bitcoin, Ethereum, and Bitcoin Cash recovered by around four percent, as the crypto market added $8 billion to its valuation.
On August 11, the crypto market lost more than $12 billion of its valuation as major cryptocurrencies recorded large losses. Since then, the market has slightly recovered but the momentum of major digital assets still remains weak.
On August 7, the value of the global cryptocurrency market hovered at around $257 billion, supported by stability in the price of both Bitcoin and Ether, the native cryptocurrency of Ethereum, at $7,300 and $400 respectively.
Since then, within less than five days, the price of Bitcoin and Ether fell to $6,300 and $320, reaching $5,980 and $305 at their lowest points on August 11. In five days, more than $43 billion were wiped out of the market.
It is evident, given the steep decline in the valuation of the crypto market, that major cryptocurrencies have faced a strong downtrend over the past few weeks. Apart from Bitcoin, the most dominant digital asset in the market, almost every major cryptocurrency and token lost a significant chunk of its value.
Ether, for instance, has been one of the worst performing digital assets throughout August, despite demonstrating momentum throughout January to July. Some analysts have attributed the steep drop in the price of Ether to the sell-off of ETH by initial coin offerings (ICOs) and blockchain projects.
Dumping of Ether on public cryptocurrency exchanges by large-scale blockchain projects explains why one of the better performing cryptocurrencies in 2018 lost more of its market valuation than any other major digital asset over the past week.
For the cryptocurrency market to experience a reversal in trend and momentum, not merely a 1 to 5 percent increase in value but a 40 to 50 percent surge in its value, a drastic change in its volume and price trend will have to be recorded, meaning that Bitcoin would have to secure momentum at major resistance levels.
In the short-term, considering the overly strong downtrend of the market, it is difficult to see even large cryptocurrencies recording corrective rallies to be at a better position to initiate a mid-term rally.
At this point, a more plausible situation is major cryptocurrencies bottoming out at the lower price range, building stability for a few weeks, and then initiating a strong rally. The probability of cryptocurrencies suddenly increasing in value by 10 to 20 percent, as Bitcoin has done in late June, is low.
Willy Woo, a respected cryptocurrency analyst who predicted the price of Bitcoin to bleed out slowly from $9,000 to $6,000 in late may, said:
“Just looking at Chris’ chart you can see BTC is much stronger this time around. (Comparing OBV indicators over the same time frame is a great way to see of this more clearly.) There’s a lot of buying going on behind the fear and capitulation.”
As mentioned above, it is of utmost importance for BTC and other cryptocurrencies to build momentum and stability, to support the next rally in the mid-term.
Featured image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:55 PM