The Great Unwind: Cryptocurrency Prices Shed $50 Billion in Market Cap on Wednesday
Cryptocurrency prices faced a brisk selloff Wednesday, with bitcoin threatening a bearish reversal and altcoins touching their lowest levels in over a month.
The cryptocurrency market touched a low of around $324 billion Wednesday following a $50 billion reversal from the previous day’s high. At press time, the market had recovered at $334.6 billion, according to data provider CoinMarketCap.
Bitcoin touched a low near $7,450, its worst levels in over a month. According to analyst Omkar Godbole, bitcoin faces a bear market indicator last seen about four years ago – namely, a breakdown of the five-month moving average below the 10-month MA.
Bitcoin was trading at $7,537 at press time.
Altcoins shed as much as $36 billion on Wednesday. Excluding bitcoin, cryptocurrency values touched a low of $198.8 billion.
Most major altcoins were off their lows by the early evening, though bitcoin cash, Ethereum and EOS had booked losses of at least 9.3%.
Among the top 100 coins by market cap, 0x was the lone gainer on Wednesday, climbing more than 14%. Tether’s USDT stablecoin was little changed.
Trading volumes picked up to around $21 billion from a low near $16 billion earlier in the week. It was abundantly clear last week that the vast majority of cryptocurrency trades were sell orders, a trend that appears to have intensified in recent sessions.
As of Monday, the percentage of cryptocurrency trades ‘in the buy’ was 12.86%, according to TurtleBC. That was the lowest level since early April. At the height of the crypto market rally last month, buy orders accounted for nearly 93% of total market activity.
The Great Unwind
There was no immediate catalyst for the massive price decay on Wednesday, though some have speculated that it represents a broad consolidation following last month’s exorbitant gains.
Others have pointed to uncertainty in South Korea, a market known for being highly speculative, amid controversy surrounding digital currency exchanges Bithumb and Upbit. A new tax policy at Bitfinex may have also rattled investor sentiment.
Crypto bulls are banking on the fact that market fundamentals haven’t changed very much in recent months despite extremely volatile swings in prices. A look at major news sources reveals a more sanguine approach to digital assets compared with two or three months ago.
Coverage of cryptocurrencies has improved after several major institutions announced their intent to enter the market. Though institutional uptake remains weak overall, banks, hedge funds and other institutional players are expanding their presence in the crypto arena.
On Wednesday, Deutsche Boerse confirmed it is “deep at work” in evaluating whether to offer bitcoin futures. The marketplace is currently gauging client interest in crypto products before deciding whether to move forward.
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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