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Crypto Market Continues Slow Bleed Out But Tokens Record 20% Gains

Last Updated March 4, 2021 3:11 PM
Joseph Young
Last Updated March 4, 2021 3:11 PM

Over the past 24 hours, the crypto market has lost about $4 billion of its valuation against the US dollar.

Major cryptocurrencies like Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Ripple (XRP) extended their losses by 2 to 8 percent. The price of BCH dropped from $236 to $215, by nearly nine percent.

In the last two to three hours, BCH, BTC, ETH, and XRP demonstrated a slight recovery in both volume and price, but the momentum of the entire market remains a concern to short-term traders.

Some Tokens Recording Unexpectedly Large Gains

While large market cap digital assets recorded minor losses, small market cryptocurrencies and tokens demonstrated gains in the range of 5 to 20 percent.

Basic Attention Token (BAT), the native cryptocurrency of Brave Browser, increased from $0.16 to $0.185, by around 16.5 percent. Since the listing of BAT by Coinbase, the third largest crypto-to-fiat exchange in the world behind Bithumb and Bitfinex, the price of BAT dropped by more than 56 percent.

However, in comparison to many ERC20 tokens and consideration of the significant price surge BAT experienced in the build-up to the Coinbase listing, BAT has performed relatively well against both Bitcoin and the US dollar.

Bitcoin also fell by 35 percent in the past week, as the crypto market experienced a wipeout of over $60 billion.

Two major factors are expected to have contributed to the recent short-term corrective rally of tokens: extremely oversold conditions for small market cap tokens and the U.S. Securities and Exchange Commission (SEC)’s caution towards initial coin offering (ICO) projects.

Every digital asset listed by Coinbase, which includes 0x (ZRX) and Brave Attention Token (BAT), meets the criteria of the SEC of a non-security. In May, when Coinbase initially released its plans to integrate Zcash (ZEC), Stellar (XLM), Cardano (ADA), ZRX, and BAT, the company emphasized that it will only pursue its plans if it can be certain that the tokens comply with existing regulations enforced by the SEC.

In the months to come, as SEC’s Enforcement Division co-director Stephanie Avakian said at the Investment Adviser Association Conference in Washington, D.C., the SEC plans to crackdown on dozens of ICOs acknowledged by securities by the commission.

Avakian said:

“We are very active, and I would just expect to see more and more.”

A handful of tokens could perform well against the US dollar, but generally, most tokens in the market are expected to drop substantially in price.

State of the Market

The cryptocurrency market is demonstrating oversold conditions following a steep decline in valuation. If Bitcoin can maintain strength in the low range of $4,000 to $4,500, it could lead to a several-month-long consolidation period.

However, if BTC falls below the $4,000 mark, which traders fear, then a short-term turn around for the dominant cryptocurrency by the year’s end will become increasingly unlikely.

With tokens on a downtrend, apart from several projects like BAT and ZRX that have been listed by Coinbase, the rest of the market could continue to extend its losses in the upcoming days.

Featured Image from Shutterstock. Charts from TradingView .