Cryptocurrency Market Update: Correction Deepens as Coin Values Approach 2018 Lows
The cryptocurrency market approached its lowest level of the year Saturday in a continuation of yesterday’s flash crash that wiped more than $30 billion off coin values.
Cryptocurrencies saw their combined market capitalization plunge to a low of $250.6 billion late Friday, according to CoinMarketCap. With the decline, coin values came within $2 billion of their bear-market low for the year.
At the time of writing, the total market cap was $255.9 billion on trade volumes of nearly $14 billion.
It became apparent early Saturday that bitcoin and Ethereum had found support near their Friday swing lows. Both coins are down less than 1% compared to 24 hours earlier.
Bitcoin touched a new yearly low of $5,938 on Saturday but has since consolidated above $6,100 on major exchanges. The largest cryptocurrency by market cap suffered a major reversal on Friday after failing to breach the all-important $6,800 threshold. The coin quickly broke down below $6,500 and has since tested multiple new lows. In terms of immediate support, BTC/USD is now eyeing $5,850.
Ethereum prices bottomed at $450.34 on Saturday, their lowest since mid-April. Ether values were last seen hovering around $470.
Elsewhere in the top-ten, EOS was down another 5% compared to yesterday and was last seen trading at $8.33. The EOS network is battling through a PR nightmare amid multiple delays and controversies.
Bottoming Process Continues
There doesn’t appear to be an immediate catalyst for the latest selloff. As Hacked reported earlier, attributing the declines to the Bithumb hack is misguided given that the market quickly recovered from the negative headlines. (The initial decline was also limited.) Bithumb has already announced plans to compensate users affected by the $30 million heist. The exchange also disclosed that the theft accounted for no more than 6% of its proven reserves.
Cryptocurrencies remain trapped in a long-term bearish cycle that emerged early this year after markets reached their highest level on record. According to Bill Baruch, President of Blue Line Futures, the six-month correction represents a bottoming process that has yet to conclude.
In a recent interview with CNBC, Baruch said that repeated selloffs over the past four months have “wiped out most, if not all, of the over-enthusiasm” and FOMO speculators from the market. While initially bad from the perspective of prices, this means speculative positions are declining. Hacked first noted the decline in speculative positions more than three months ago following the April Fool’s Day selloff.
Analysts have noted that the recent six-month correction mirrors bitcoin’s 2014 retreat, which highlights the boom-and-bust nature of the digital asset class. Against this backdrop, bitcoin and its altcoin counterparts likely need to demonstrate several months of consolidation and stability before the bull market re-emerges.
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.