Yesterday may go down in history as the “Black Monday” for crypto markets. Most Alt-coins are in full capitulation mode, falling below critical support levels by double digit losses. The entire cryptocurrency market capitalization sits at $190 billion, a level unseen since late October of 2017. In the face of all of this red, Bitcoin is maintaining relative stability, only falling 4.5% today while most coins have fallen over 10%. This leads us to assume the majority of people are capitulating their alts into BTC, if not exiting the market as a whole. BTC did break through the $6000 support, briefly touching $5,889 on Binance. Again, we are witnessing the theme of massive uncertainty around Bitcoin price, causing many people to panic sell their positions at a loss. Without a clear picture of how bitcoin will move, its very unlikely we will see any positive movement within the crypto markets. Bitcoin needs some upwards momentum, and a close above $6,450 could spark a slight reversal trend. On the bearish side, another close below $6000 could push BTC down into the low $5000 range, or even into the $4000’s. Both scenarios are possible, although with current price levels and sentiment, the bearish scenario seems to be more likely. One important thing to note is that Bitcoin is regaining dominance in rapid fashion. Today, it makes up just over 54% of the crypto market, its highest point since December.
Bitcoin Dominance Chart:
With that being said, all coins have seen a large tumble from their all time highs. Here is an example of the top ten:
Price Times: 8/14/2018 7:35 EST
Bitcoin (BTC) – Current Price: $6,174 which is -225.37% from ATH of $20,089.00
Ethereum (ETH) – Current Price: $273.00 which is -424.86% from ATH of $1,432.88
Ripple (XRP) – Current Price: $0.27 which is -1,340.74% from ATH of $3.84
Bitcoin Cash (BCH) – Current Price: $497.28 which is -775.90% ATH of $4,355.62
Stellar (XLM) – Current Price: $0.22 which is -332.17% from ATH of $0.93
EOS – Current Price: $4.44 which is -416.03% from ATH of $22.89
Litecoin (LTC) – Current Price: $53.80 which is -597.61% from ATH of $375.29
Cardano (ADA) – Current Price: $0.09 which is -1,324.50% from ATH of $1.32
Monero (XMR) – Current Price: $83.42 which is -494.4% from ATH of $495.84
Tron (TRX) – Current Price: $0.02 which is -1,503.62% from ATH of $0.30
While many people are sulking in their losses, or praying for another “alt-season”, I would not be so confident. This selloff is something that has been long overdue. Too many altcoins achieved massive valuations on projects with nothing more than a dedicated team and a good idea. Unfortunately, the days of massive Altcoin fomo pumps may me coming to an end. While this may be unfortunate for day traders looking to make a quick buck, it will help legitimize the crypto space and most likely attract a more mature investing audience. Looking forward, I hope this downturn will be fresh in the minds of developers and teams of crypto projects. Investors in crypto assets need to be more demanding of a viable, scalable and functionable product before investing. Utopian visions of decentralized everything may be too far down the road to come to fruition anytime soon. I believe there is a happy medium between decentralization and centralization, where the two can coexist peacefully. One cannot just expect a nine year old technology to permeate every aspect of our lives overnight, these things take time, and I believe there is a more logical path to achieving these goals.
One simple explanation for this massive selloff within the greater alt market is likely due to Ethereum’s massive downturn. In 2018 there were billions of dollars raised to fund new ICO’s, most of which were conducted using Ethereum. A lot of this took place when Ethereum was near $1000 USD. Companies that raised millions have slowly watched their operating capital bleed out, and many are panic selling their capital in order to maintain some of that value. This has likely exacerbated the selloff. When most alt-coins were funded by ETH, its not surprising to see such bloody selloffs when Ethereum drops by nearly 20% in one day. Again, and I hate to say this because we are not properly hedged, there is likely more downside to the crypto market. If you want to stay in the crypto market but are not prepared to short, a risky bet at these levels, then Bitcoin is likely your safest bet. Especially with the impending ETF decisions later this year, in combination with the announcement that ICE will be launching Bitcoin settled futures possibly as soon as November this year. As we have mentioned in previous articles, these are massively bullish news items that the market has yet to price in. There is too much gloom and doom from Ethereum and alt coins for anyone to be optimistic about prices right now. When things turn around it will happen swiftly. Don’t get caught with your pants around your ankles trying to predict when bitcoin will “bottom”. Technical analysis can help predict short term price movements, although Bitcoin has a tendency to do unpredictable things.
Ethereum Price Chart (6H Time Frame- ETH/USD):
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