Bitcoin Risks Hard Fall as Crypto Markets Recoil
After more than a week of stability, bitcoin’s price tumbled by as much as 2% on Wednesday after a sudden wave of selling hit the cryptocurrency market. The leading digital currency now risks a bigger pullback toward the December low, which is the last major barrier before $3,000.
In the last 24 hours, bitcoin has managed to fall from a high of around $3,500 all the way down to $3,405, according to CoinMarketCap. On an aggregate level, bitcoin’s price averaged $3,412.53 at the time of writing for a loss of 1.6%.
On individual exchanges, BTC experienced a deeper correction than what the aggregate data suggest. The cryptocurrency is trading in the $3,366-$3,370 range on Coinbase, Bitstamp and Bittrex. The hourly chart highlights the extent of the decline, which occurred suddenly overnight. The MACD and Relative Strength Index (RSI) continue to show weak underlying momentum.
Bitcoin’s last yearly low was set in mid-December when prices tumbled to around $3,122. This is the next major target for the bears. A loss of the December price floor will likely expose $3,000 as the next support level.
The recent breakdown in price is unsurprising given the lack of direction seen in the market over the past seven days. As Hacked recently reported, extended periods of directionless trading are usually followed by brisk selloffs. The extent of the latest downfall was limited relative to previous corrections.
Before the recent drop took place, bitcoin had exhibited the lowest volatility for over two-and-a-half months. As of Tuesday, the 30-day volatility index was estimated at 2.35%, according to Bitvol.info.
Altcoins, Tokens Fall
Bitcoin tends to exert a gravitational pull on the broader market, but the decline on Wednesday was more concentrated in alternative coins. The total cryptocurrency market fell by as much as 4%. With the exception of Tether and Binance Coin, all major assets listed in the top 20 reported declines.
At the time of writing, the total cryptocurrency market capitalization was valued at $111.5 billion. It had peaked near $116 billion over the weekend.
While there were no immediate catalysts for the sudden breakdown in price, analysts generally agree that further pain is in store for digital assets. Charles Hoskinson, the founder of Cardano, recently predicted that it could be another decade before cryptocurrencies recover their all-time highs. This means it could be a while before prices reflect improved fundamentals.
Bitcoin is currently in the midst of its longest bear market in history at 415 days. Altcoins and tokens are also expected to cross that threshold later this month. More on this story: Bitcoin Volatility Recedes as Bear Market Reaches 411 Days.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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