In the last 24 hours, the crypto market has slightly declined by $2 billion in valuation as the Bitcoin price fell by one percent.
The decline in the value of major crypto assets in the likes of Ripple (XRP) and Ethereum (ETH) which recorded drops in the range of three to five percent prevented the market from continue recovering.
From January 30 to January 31, the crypto market seemed to be rebounding as its valuation rose from $111 billion to $115 billion. But, in the past 12 hours, the valuation fell back to $112 billion, unable to sustain its momentum.
Bitcoin Weak in Short-Term, Where is the Bottom?
Generally, traders foresee the Bitcoin price declining to the low $3,000 region in the near future if it fails to demonstrate a strong recovery above mid-$3,500.
Cred, a cryptocurrency technical analyst and trader, said:
Low time frame breakout and pullback into support. However, don’t lose sight of the bigger picture: bearish bias as long as price is below $3,513, which is a high time frame level.
Similarly, Luke Martin, a cryptocurrency analyst, noted that the price trend of Bitcoin is not showing any momentum or signs of a trend reversal, which may lead the asset to drop to the low $3,000 region and even to the mid-$2,000 region.
As Bitcoin started to fall again following a steep sell-off on January 29, major crypto assets which performed well against both BTC and the U.S. dollar began to record large losses.
Ethereum has fallen back to the low $100 region and is at risk of declining below the $100 mark. Ripple fell four percent on the day to $0.3, eyeing a drop to $0.25.
Previously, a cryptocurrency trader DonAlt suggested that the bottom of Bitcoin is yet to be established and it could engage in a substantial drop in the short-term.
On January 29, after BTC and the rest of the crypto market endured a large drop in value, the analyst said that the inability of BTC to recover beyond key resistance levels could lead it to the $2,000 to $3,000 range.
The analyst added:
“Sitting in the last buy zone before new lows. Cut some of my buys due to the breach of the top of the zone. Looking to re-add them if it is reclaimed. If green fails I expect a quick move into the $2,000s. If it holds $4,000 is on the cards.”
As CCN.com reported on February 1, major cryptocurrency exchanges are experiencing difficulties with liquidity issues, possibly due to the lack of trading activity in the global crypto market.
QuadrigaCX, one of Canada’s largest crypto trading platforms, publicly said that it is working to address its liquidity issues by locating its cold wallets but the firm has not found much success in doing so.
The exchange said:
“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us. Unfortunately, these efforts have not been successful. Further updates will be issued after the hearing.”
Several analysts suggested earlier this week that as the crypto winter intensifies, exchanges will run into serious problems and shutdown.
Recovery Will be Difficult
In some areas such as development and regulation, the cryptocurrency sector is performing better than before.
But, with exchanges struggling and major crypto assets finding it difficult to stay above crucial support levels, the cryptocurrency market is expected to suffer more bloodbath in the short-term.
Bitcoin declining with low liquidity and low volume may mean that it is free falling without sell-pressure and as such, it is important for BTC to hold the $3,300 to $3,400 range.
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Featured Image from Shutterstock. Price Charts from TradingView.
Last modified: March 4, 2021 2:53 PM