Over the past 24 hours, the Bitcoin price has dropped by more than 7.5 percent from $8,150 to $7,500, as the crypto market lost $30 billion in one of the steepest drops in the past 30 days.
Since July 29, Bitcoin recorded three consecutive sell candles on its one-day chart, demonstrating the lack of volume and decline in the momentum of the dominant cryptocurrency.
On July 30, recognizing the declining momentum of Bitcoin, CCN reported:
“If BTC fails to maintain its volume and falls below the $8,100 mark, it is possible for BTC to test a major support level at $8,000 and eye a drop below the $8,000 mark. If BTC finds stability in the lower end of the $8,000 region, a short-term bottom will likely be found at $8,000, with expected recovery to $8,500.”
Throughout the past 48 hours, Bitcoin struggled to demonstrate any sign of recovery in its volume and price, and ultimately experienced a significant drop in its value overnight.
However, despite its fall, Bitcoin has sustained its dominance over the rest of the crypto market, reaching a yearly high at 48.1 percent for the first time since January of 2018. The strengthening of the Bitcoin Dominance Index in a highly volatile period signifies the unwillingness of investors to take additional risks by investing in other major cryptocurrencies and small market cap tokens.
In the last 30 days, BTC has been the best performer amongst all cryptocurrencies in the market, and often outperformed both major digital assets and tokens on its upside. Hence, in consideration of the strong movement of BTC throughout July, it was obvious to investors that a drop in the price of BTC would cause other cryptocurrencies to fall by even larger margins
While BTC recorded a 7.5 percent drop, Polymath, Bitcoin Private, Pundi X, VeChain, Ark, Aelf, Decentraland, ICON, WanChain, Ontology, and WaltonChain, tokens with active developer communities that have demonstrated solid momentum in the first and second quarter of 2018, recorded 10 to 30 percent drops in the past 24 hours.
The four consecutive sell candles on the one-day price chart of BTC suggest that for BTC to initiate a quick recovery in the immediate term, a swift reversal with a spike in volume will be necessary. However, at least as of now, because of the overly strong downtrend of BTC, an instantaneous recovery to the $8,000 region is highly unlikely.
Some analysts expect a bottom of the recent drop in the price of BTC to be found in the higher end of $6,000, possibly at the $6,900 mark.
With investors utilizing stablecoins such as Tether that are hedged to the value of the US dollar to limit the losses of their investments in Bitcoin, and investors in tokens moving their capital back to major digital assets including Bitcoin and Ether, until the crypto market finds stability and establishes a strong base to initiate a mid-term rally, a short-term surge in the market valuation of tokens is difficult to envision.
Featured image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 6:20 PM UTC