Crypto Markets Decline $20 Billion from Recent Peak

Crypto prices ran into overbought resistance late Monday, triggering a rapid decline from monthly highs. Bitcoin and its altcoin peers were down more than 10% at the start of Tuesday trading, leading some to question whether the latest rally attempt was merely a flash in the pan.

Major Pullback

The combined value of cryptoassets plunged over $20 billion to $126.8 billion, according to CoinMarketCap. The crypto market cap peaked north of $147 billion during the previous session.

Daily trading volumes cooled from highs near $26 billion back down to around $21.3 billion. All major exchanges reported a drop in activity, though Binance and OKEx processed more than $1.1 billion in trades.

As the following chart illustrates, all major cryptocurrencies have recorded steep drops in the last 24 hours. Virtually all are in the green over the past seven days.

The asset class as a whole remains well off its yearly low, leading some to believe that the worst of the downtrend had passed. Bitcoin’s price bottomed near $3,100 earlier this month before recovering north of $4,300 on Monday. It has since fallen back down to the $3,700-$3,800 range.

The market’s sharp reversal on Tuesday isn’t surprising considering the rapid acceleration seen over the past week. As Hacked reported Friday, the major cryptocurrencies rose between 24% and 143% last week. Gains of this magnitude are not sustainable.

Declines in bitcoin cash have been especially severe in the last 24 hours, though this follows triple-digit gains last week. BCH was down more than 20% earlier in the day. It now trades at $164, having declined 17.5% on the day.

Bright Future for Crypto

2019 is shaping up to be a positive year for crypto, according to big-four consulting firm PricewaterhouseCoopers. Henri Arslanian, the firm’s fintech and crypto leader for Hong Kong and Asia, recently touted the entry of big players into the market as a major value driver for the asset class.

In an interview with Bloomberg on Christmas Eve, Arslanian said 2018 saw “a lot of the big players entering the space,” referring to banks and other institutional players. He added: “In 2019, I expect even more players to enter into the sector as well, especially in different ways. Some of them may decide to launch their solutions, others may look to partner with crypto firms, and others might look to invest in crypto companies.”

Several jurisdictions around the world have adopted a more favorable stance toward cryptocurrency. In the United States, the Securities and Exchange Commission (SEC) has deemed bitcoin and Ethereum “sufficiently decentralized” to not warrant a security label. The forthcoming launch of security token exchanges could provide greater regulatory certainty for tokens that fall under the SEC’s purview.

Not everyone is on board with institutional crypto but at this point the path seems inevitable. Exchange operators in the United States and Europe have signaled their readiness to launch new crypto markets in 2019. Meanwhile, fund issuers continue to pursue bitcoin exchange-traded funds in an effort to boost adoption among retail investors.

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.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi