At last, after a week-long correction, the cryptocurrency market surpassed $450 billion in valuation, for the first time since February 4. While the market has been steadily recovering, it still isn’t ready to initiate strong rallies.
On February 10, when the market valuation of all cryptocurrencies in the market combined achieved $458 billion, the price of bitcoin peaked at $9,074 and the price of Ethereum hit $911. However, since then, the market has struggled to maintain momentum, as bitcoin fell by more than $500 to $8,461 and Ethereum fell to $840.
Briefly, earlier today, the price of Ether, the native cryptocurrency of the Ethereum network, fell to $820, to a two-day low. Generally, the price trend of Ether has followed that of bitcoin over the past few weeks. As the price of bitcoin surpassed $9,000, Ether achieved $900 and as the price of bitcoin fell to $8,500, Ether fell to $850.
Overall, the entire market has been following the trend of major cryptocurrencies including bitcoin and Ethereum, mostly because in periods of extreme volatility, cryptocurrencies with large market caps tend to operate as reserve currencies of the market.
In previous corrections, the cryptocurrency market recovered quickly because there was still hope among newcomers and casual investors that the market would rebound in the short-term. This correction has been significantly different to previous corrections. The media has reported more stories about investors losing money than optimistic developments within the cryptocurrency sector.
South Korea in particular, which continued to show optimism throughout 2017, was hit with a bear market in recent weeks due to negative press. This week, another individual committed suicide due to his losses in the cryptocurrency market. The public was shocked to discover that the individual was a well-known senior developer at a high profile IT startup in the country.
Given the negative press towards the cryptocurrency market, despite the enthusiastic approach of regulators as seen in US Securities and Exchange Commission (SEC) and US Commodities and Futures Trading Commision (CFTC) senate hearing, it may require several more weeks for the market to recover and major cryptocurrencies like bitcoin, Ethereum, and Ripple to regain psychological thresholds at $10,000, $1,000, and $1 respectively.
Market Will Rebound in a Few Weeks
Pantera Capital CEO Dan Morehead noted that the cryptocurrency market could begin rallying in a few weeks, as the market has been in correction for over 52 days. Morehead said:
"We're certainly aware it's a very speculative market. It's volatile on the upside. It can be volatile on the downside. And we're 52 days into this. It seems like another couple of weeks and everything will be normal and [bitcoin] can start growing back up again.”
Morehead emphasized that bitcoin is still underowned by retail traders and the adoption of the asset class by institutional investors in 2018 could allow the market to grow rapidly.
“There's such an institutional appetite to get exposure to this. It's a half-a-trillion-dollar asset class that nobody owns. That's a pretty wild circumstance. And bitcoin is still so underowned by institutional investors that it trades at its own beat,” he said.