Bitcoin’s price printed fresh three-week lows on Tuesday, as fear and uncertainty continued to dictate the trend for the number one cryptocurrency. Now, bitcoin is veering towards a re-test of long-term psychological support, threatening to undermine almost a year of progress.
The bitcoin price plunged by nearly $200 in the span of a few minutes on Tuesday. The loss of the $7,000 support triggered a deeper fall all the way down to $6,584, the lowest in over three weeks. The nearly 4% loss puts bitcoin closer to the upper band of a key psychological range that tracks between $6,000 and $6,500.
At current values, bitcoin has a total market capitalization of $122.3 billion. Spot turnover was valued at just over $735 million, according to Bitwise tracking data. Volumes are well below levels seen through the spring and early summer when bitcoin was recovering from its previous low.
Accounting for 67.3% of the overall cryptocurrency market, bitcoin exerted a strong gravitational pull on other assets. The Tuesday selloff prompted a similar reaction across altcoins and tokens, sending the overall cryptocurrency market to its lowest level in over six months.
Digital asset values bottomed near $181.8 billion, the lowest since May, according to CoinMarketCap. Remarkably, the asset class has shed more than $180 billion from its June high.
With the exception of Tether (USDT), a stablecoin partially backed by U.S. dollars, all of the top cryptocurrencies reported declines on Tuesday. Ethereum (ETH) shed 6.5%, XRP plunged 10.% and bitcoin cash was down 9.4%.
Ethereum’s fall from grace is especially notable. The developer’s cryptocurrency touched an intraday low of $135.01, wiping out its gains for the year.
Bitcoin and the broader cryptocurrency market are languishing due to adoption constraints, regulatory uncertainty and an extremely bearish outlook among traders. Bitcoin’s Fear & Greed Index, a multi-factor sentiment analysis, is registering ‘extreme fear’ on Tuesday.
Strategists warn that a “perfect storm” could be brewing for bitcoin as dismal trade volumes and a lack of institutional interest keep digital assets from reaching critical mass. Although Bakkt bitcoin futures have picked up in recent months, the highly-anticipated launch of the custody platform has failed to deliver as expected.
Economist and crypto analyst Alex Kruger has warned that Bakkt traders have very little interest in storing bitcoin. His research unveiled that the futures exchange is being used solely for speculative purposes. Even then, volumes remain razor thin.
Despite the recent correction, bitcoin remains the best-performing major asset of 2019. The digital currency is up more than 76% since Jan. 1 and is well on its way to setting a higher low for the year. Bitcoin has printed a higher yearly low in six of its last seven years.
Last modified: August 10, 2020 4:42 PM UTC