The cryptocurrency market experienced an abrupt $4 billion drop in its valuation, by just about 3.5 percent. While major cryptocurrencies struggled to demonstrate signs of a potential corrective rally, small market cap digital assets and ERC20 tokens plunged by more than 10 percent on average.
On December 11, the Bitcoin price dropped from $3,587 at its peak to $3,370. From its daily peak, the dominant cryptocurrency is actually down six percent.
One troubling sign of the short-term price trend of BTC is its low daily volume. In a steep sell-off or a 5 to 10 percent dip in price, an asset tends to see an increase in daily volume as sell volume intensifies.
When the volume of the asset does not increase but still drops in value, it suggests that the asset is free-falling without high sell pressure and with relatively small sell orders from the bears in the market.
The Ethereum price has been experiencing a similar trend as Bitcoin as its price fell by about the same magnitude as BTC with a drop in daily volume. In the past week, the volume of ETH has dropped from $2 billion to $1.6 billion, by nearly 20 percent.
Several traders have called a bottom for Bitcoin this week, seeing the strong recovery of Bitcoin from the low $3,000 region with the $3,000 support level intact.
But, as CCN reported on December 10, if BTC fails to breakout of major resistance levels at $3,700 and $4,000, a proper bottom cannot be confirmed. As of Tuesday, BTC remains in a tight range between $3,000 to $3,500.
A cryptocurrency technical analyst with an online alias “Hsaka” said:
“Rejected by previous support. Seems to be forming a descending channel on the LTFs (aka a way to visualize a downtrend). I often use channels for confluence with horizontal levels (both the rejections from the black horizontals were also at the channel boundary).”
In regards to the short-term trend of ETH, Edward Morra, a recognized digital asset trader, raised the possibility of ETH dropping to $55 suffering a 35 percent dip.
“If ETH bulls lose this support and low set at $83, it is basically vacuum till next meaningful support around $55 – $45, another 35% downside from here.”
Already, according to ATHCoinIndex, most tokens have already dropped by nearly 99 percent from their all-time highs and are still at risk of falling even further against the U.S. dollar.
With increasing regulatory pressure from the U.S. Securities and Exchange Commission (SEC) and the public’s decline in confidence towards the initial coin offering (ICO) market, tokens could continue to lose its value from its already low price range, which could lead some to lose all of their value in the short-term.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: October 13, 2019 23:31 UTC