Week in Review: Cryptocurrencies Reach New Lows for the Year as Bitcoin Breaks Below $6,000

The cryptocurrency market on Friday reached new lows for the year, as bitcoin made a definitive break below the psychologically significant $6,000 level. The major altcoins led by Ethereum, Ripple and bitcoin cash also headed for fresh declines as bear-market headwinds continued to sway price action.

While investors have been unable to find reprieve in prices, they should take solace in the fact that the cryptocurrency market appears to be making progress in terms of regulation and institutional adoption. Case in point: South Korea and Malta have taken definitive steps to bolster their domestic crypto industries.

Crypto Bear Market Hits New Low

A week of relative calm for cryptocurrencies came to an abrupt end on Friday, as the market plunged to its lowest levels since November.

The breakdown appears to be have been driven by technical trading as bitcoin found acceptance below a key support zone. Comprising more than 43% of the market, bitcoin’s decline dragged altcoins along for the ride. The market capitalization fell below $233 billion, exceeding last week’s swing low of around $237 billion.

Bitcoin fell sharply below $6,000 but was spared a new low for the year after the market defended the $5,800 level. Last weekend, the largest cryptocurrency by market cap bottomed around $5,755 on major exchanges.

Over the past seven days, bitcoin has fallen nearly 7%. The remainder of the top-ten cryptocurrencies (with the exception of Tether’s USDT stablecoin) recorded double-digit losses over the past seven days.

EOS has lost roughly half its value over the past four weeks amid a difficult transition to the newly launched mainnet. Meanwhile, Ethereum can be had for around $410, its biggest discount since April.

Ripple XRP is trading at its lowest level of the year. Bitcoin cash is currently valued at its lowest since early April.

Regulatory Clarity

South Korea and Malta this week laid out important regulatory guidelines for digital currency exchanges, ICOs and other blockchain-based companies.

The Maltese government passed three separate blockchain-based initiatives on Tuesday aimed at strengthening regulation and encouraging crypto-market development. The tiny Mediterranean nation has been dubbed ‘blockchain island‘ for its favorable policies toward the emerging sector.

The approved bills include the Virtual Financial Assets Act, the Innovative Technology Arrangements and Services Act and the Malta Digital Innovation Authority.

Meanwhile, South Korea announced new guidelines to government cryptocurrency exchanges in the wake of multiple cyber attacks earlier this month. The new rules, which are aimed at strengthening anti-money laundering and know-your-customer guidelines, bring digital currency exchanges outside the realm of “communication vendors” and into the arena of regulated financial institutions.

Stocks and Volatility

Volatility made a stunning return to Wall Street Monday as concerns over a global trade war ignited a panic sale in equities.

The CBOE Volatility Index, also known as the VIX, surged more than 25% to its highest level in three-and-a-half months. Vol would test new intraday highs later in the week.

Stocks managed to recover some lost ground after President Trump’s trade team convinced markets they will not be singling out China in their battle against intellectual property theft. A report by The Wall Street Journal last weekend suggested the White House was planning to bar Chinese investors from owning a stake in U.S. technology companies.

The Week Ahead

For cryptocurrencies, the search for an elusive bottom continues this week as bitcoin and the major altcoins struggle to regain their footing. Perpetually low trade volumes and the lack of new buyers could make this a difficult task.

In conventional markets, economic data will be in the spotlight as the U.S. Labor Department unveils its monthly jobs report. Equity traders are also gearing up for corporate earnings season, which is scheduled to get underway in a few weeks’ time.

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 Hacked.com and Contributor to CCN.com, 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