Cryptocurrency Market Cracks $300 Billion Following Bitcoin’s Dramatic Revival
The cryptocurrency market crossed $300 billion on Tuesday for the first time in six weeks, as bitcoin’s dramatic surge triggered a modest relief rally in altcoin prices with the likes of bitcoin cash, Stellar and EOS gaining traction.
Crypto Market Update
The combined value of all digital currencies peaked near $301.1 billion on Tuesday, according to CoinMarketCap, the highest since June 11. The rally was underpinned by a surge in trading volumes, with market turnover approaching $20 billion for the second time in a week.
Bitcoin was the spark that ignited the broad market rally, as prices crossed $8,300 for the first time in 60 days. Altcoins and tokens followed bitcoin’s lead after initial hesitation, with the top-20 majors reporting 24-hour gains.
In terms of individual coins, bitcoin cash was the closest to BTC in terms of percentage growth, rising 4.9% to $856. BCH peaked near $872, its highest in six days.
EOS, which has struggled mightily since a botched mainnet launch in early June exposed it to criticism and bad press, rose 4.6% to $8.46.
Stellar Lumens rose 3.7% to trade at $0.298. A single Lumen was worth as much as $0.303 on Tuesday.
Ethereum, the no. 2 cryptocurrency by market cap, rose 2.9% to $476.
Price Independence: A Blessing in Disguise
While bitcoin’s oversized gains relative to altcoins has alarmed some market observers, it also points to greater price independence – a critical feature of a healthy, mature market.
Since the cryptocurrency market broke out in early 2017, altcoin and token prices have been strongly correlated with bitcoin and Ethereum. This correlation began to break down at the start of the year as altcoin speculation reached an all-time high. However, since the bear market returned, asset correlation has been a staple of the cryptocurrency market.
In addition to price independence, assets like bitcoin have demonstrated greater price stability in recent months. In June, bitcoin price volatility reached its lowest level in a year, signaling the end of a prolonged bottoming process that took several months to materialize. Although bitcoin remains much more volatile than conventional assets, its price has entered prolonged periods of narrow fluctuations relative to its historical trend.
That being said, crypto assets will continue to retain a higher level of volatility so long as liquidity remains an issue. CoinMarketCap, a resource cited heavily by Hacked, recently announced measures to weed out “fake volumes” from its calculation of daily turnover. As recently as a few weeks ago, trade volumes were down to multi-month lows.
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.