Over the past 24 hours, the crypto market has lost $6 billion from its valuation, experiencing a slight drop after a solid corrective rally by Bitcoin.
While Bitcoin recorded a small gain of 0.5 percent, other major cryptocurrencies including Ethereum, Ripple, Bitcoin Cash, EOS, Stellar, Litecoin, and Cardano fell by 1 to 4 percent, affecting the token market.
On August 17, as the price of BTC showed a rapid recovery from $5,850 to $6,400, tokens recorded massive gains in the range of 30 to 80 percent, with VeChain increasing by over 80 percent against the US dollar.
However, as BTC stabilized in the mid-$6,000 region and other major cryptocurrencies struggled to sustain their momentum on the upside, tokens suffered. In the past 24 hours, Aion, DigixDAO, OmiseGO, BAT, and 0x fell by more than 6 percent against the US dollar and Bitcoin.
Yesterday, on August 19, CCN reported that the fall in the price of tokens in the past 48 hours can be attributed to the overly aggressive trades initiated by investors in the crypto market that considered the minor corrective rally of Bitcoin to be the start of a bull run.
Consequently, many traders reallocated their funds from Bitcoin, which has performed relatively well against the US dollar in the past month as seen in the rise of its dominance index, to tokens and high-risk high-return trades.
Some tokens including Ontology, Tezos, and Nano recorded solid 10 to 20 percent gains, but have fallen throughout the day due to the lack of momentum in Ether and other major cryptocurrencies.
In a bear market or downtrend, the dominance index of Bitcoin tends to increase as investors consider BTC to be a store of value in the cryptocurrency market. As such, in the past few months, apart from some exceptions including Binance Coin (BNB), Bitcoin has been one of the better performing cryptocurrencies.
In the past 24 hours, the dominance index of BTC has increased from 51 percent to 52 percent. A one percent increase is a minor movement, but considering that the market has been overly optimistic in the short-term trend of crypto throughout this week, the continuous increase in the dominance of BTC is important to consider.
The volume of Bitcoin and other major cryptocurrencies tend to be extremely volatile. The volume of BTC could remain in the $4 billion region and suddenly rise to over $6 billion within 24 hours, especially during corrective rallies.
But, the volume of BTC has fallen below the $4 billion mark, a level the market has not seen in the past two weeks. As of August 20, the volume of Bitcoin and Ethereum remain at $3.5 billion and $1.5 billion, less than half of their volume in June.
In the short-term, it is crucial for Bitcoin to sustain its current stability, allowing the market to establish a bottom at the lower price range. If BTC suddenly rises by large margins, it could lead the market to record overbought conditions.
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Last modified: May 20, 2020 6:05 PM UTC