Crypto Rally Cools as Bitcoin Cash, Litecoin and EOS Fall 6%
Crypto prices pivoted lower on Sunday, as a fresh bout of profit-taking swept the markets after another run in with overbought levels. Bitcoin’s share of the overall market capitalization strengthened to nearly 53%, its highest since January.
With the exception of Tether (USDT), a dollar-backed stablecoin, all 20 of the top cryptocurrencies reported declines Sunday. Among the majors, bitcoin cash (BCH) fell 6.6% to $284.89. The fourth-largest cryptocurrency by market cap is down nearly 13% from last week’s high.
Litecoin (LTC) lost 6.6% of its value to trade just above $76.00. LTC peaked above $93.00 earlier this month, having tripled in price since the start of the year.
EOS was also among the biggest decliners on Sunday, falling 6.1% to $5.13.
The three aforementioned cryptocurrencies have all outperformed the market this year and were considered significantly overbought earlier this month. In other words, after doubling and in some cases tripling in price, a sharp pullback was anticipated.
Cardano (ADA) also fell 6% to $0.0725. Stellar (XLM) and Binance Coin (BNB) each dropped by at least 4%.
The total cryptocurrency market capitalization is down roughly $5 billion from Saturday’s high and is currently valued at $176.7 billion.
Bitcoin’s Dominance Rises
Bitcoin (BTC), the largest and most influential cryptocurrency, was also down on Sunday, though the size of the pullback was much smaller than its peers. Over the past 24 hours, BTC has dropped 1.1% to $5,281.44, according to CoinMarketCap. On Saturday, it peaked just above $5,400 on Bitfinex, setting the stage for a bigger short-term rally. Read: Bitcoin’s Least Resistant Path is Higher.
By declining only slightly relative to its peers, bitcoin’s dominance rate peaked at 52.9%, the highest since late January.
Bitcoin’s share of the overall market has been in a gradual decline since mid-December. The end of ‘crypto winter’ and the influx of new capital into altcoins and tokens dragged the dominance rate back down to around 50%.
A declining dominance rate is seen as healthy for the cryptocurrency ecosystem because it means that alternative coins are less influenced by bitcoin’s price behavior. The aforementioned majors, as well as some of the leading small caps like Basic Attention Token (BAT), Tezos (XTZ) and Maker (MKR), have been more likely to trade independently of bitcoin this year.
Market Still in Recovery
Despite the current pullback, crypto markets appear to be on a long path to recovery. As Hacked recently reported, bitcoin’s next four-year cycle is already underway. This new cycle, which began shortly after the price bottomed in December, will be accompanied by new dominant trends (both to the upside and downside). Investors with a long-term horizon can therefore expect big price movements over the next three years.
While there are many reasons to believe that bitcoin’s bottom is in, crypto analyst Willy Woo recently gave a 95% or higher probability that prices won’t repeat the December low.
“I’m swimming in data and you kind of get an intuition about things. I’d say a one-in-20 to one-in-40 chance that this floor falls through. So that’s 95%-97.5% that the bottom is in. I’d consider if we drop below $4,300, they [market bears] would be very lucky.”
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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