The cryptocurrency market has lost more than $12 billion from its valuation in the past 24 hours, as the Bitcoin price fell under the $4,000 mark.
Major cryptocurrencies including Stellar (XLM) and Bitcoin Cash (BCH) lost around 6 percent in value on average, demonstrating a lack of momentum and trading activity.
On December 2, CCN.com reported that if the price of the dominant cryptocurrency falls below the $4,000 mark and fails to recover to the $4,200 to $4,400 range, then a further drop to the mid-$3,000 region can become a possibility.
The report read:
“A technical analyst with an alias ‘The Crypto Monk’ stated that if BTC sustains the $4,000 support level in the next 12 to 24 hours, then a rebound to the $4,200 to $4,400 range is possible. But, if it falls below $4,000, and it was close to doing so earlier in the day, another short-term correction could be in play.”
Since Sunday, Bitcoin (BTC) has demonstrated a decline in its daily volume from around $6 billion to $5.2 billion as its price fell. Under normal circumstances, during a downtrend, the volume of BTC tends to spike up as more sell orders hit the market.
The drop in the volume of BTC as its price fell by nearly four percent in the last 12 hours suggests that the asset is showing low momentum without much strength at the $4,000 support level to sustain a positive short-term price movement.
Throughout the past five days, possibly due to the positive meeting between U.S. President Donald Trump and Chinese President Xi Jinping on a potential trade agreement, the Dow Jones and U.S. markets have increased substantially in value.
Since November 27, the Dow Jones Industrial Average has increased by 1,065 points, almost fully recovering from the month’s downtrend during which it saw its yearly gains deleted within a three-week period.
However, while the U.S. market recovered, the cryptocurrency market has continued to show a lack of strength and volume.
Alex Krüger, an economist and a cryptocurrency analyst, said that Bitcoin is demonstrating no correlation to the S&P 500 as well as other U.S. markets. He said:
“As of late bitcoin has been positively correlated to the S&P 500. However, short term correlations are unstable and fluctuate around zero, and the 180 day correlation stands right at 0.”
The recovery of the U.S. stock market, which was expected by the majority of investors given the inevitability of a trade agreement between the U.S. and China, is not having any impact on the price trend of cryptocurrencies.
Last week, several reports claimed that as investors in the U.S. market headed for the exit, high-risk, high-reward assets like cryptocurrencies were liquited first, prior to traditional investment vehicles and assets.
Based on the price trend of Bitcoin throughout the past two weeks, if BTC falls to the low region of $3,000, a new monthly low could be established in the days to come.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: June 14, 2020 9:35 AM UTC