This Week in Cryptocurrencies-2/2/18

By Matthew Zeman | February 2, 2018

Cryptocurrencies have had another tough go this week, as selling has once again intensified. In what may simply be nothing more than some expected growing pains as these currencies look to become more mainstream, traders and investors are trying to figure out what to make of the ongoing sell-off.

Is Regulation Fueling the Selling?

The idea of additional regulation of the cryptocurrency market is nothing new, but the notion seems to be causing some investors to think twice. In a recent article from Reuters.com, India was reported as having ” vowed to eradicate the use of crypto-assets, joining China and South Korea in promising to ban parts of the nascent market where prices have boomed in recent years.”

The idea of further regulation should not come as a surprise, however. Cryptocurrencies have exploded in popularity in recent years, with some seeing a very steep, parabolic rise in 2017. With more and more traders and investors looking to get in on the action, of course regulators will begin to take a closer look.

A Significant Hit to Market Capitalization

As the sell-off has intensified, cryptocurrencies have seen a significant drop in market cap. As reported in a recent article from Marketwatch.com, the cryptocurrency market has declined by $103 billion in just 24 hours. Given the recent selling seen in these currencies, a bounce back was imperative this week to stem the bleeding. Such a bounce back never came, however, and now these currencies could be in the midst of another leg lower in price.

The Week in Cryptocurrency Prices

Bitcoin: Bitcoin has been at the forefront of crypto news this week, and is seeing heavy selling again on Friday. Not only have prices fallen under the $10,000 level, but they dipped to just over $8000 at one point on Friday. The market is off its lows, however, and the selling may be subsiding for now. The market is, however, in a very clear downtrend on the charts and will need some substantial upside to undo the recent chart damage.

Bitcoin Cash: This cryptocurrency has also seen significant declines this week, trading as low as the $1000 level. It is also in a clear trend lower, and ending the week on a sour note could open the door to more selling early next week. Like Bitcoin, however, it has managed to bounce from the lows seen earlier in the session.

Ethereum: This crypto has dropped from over $1200 to less than $800, and is also seeing heavy selling pressure on Friday. It did see buyers step in around the lows, a level which also saw buying interest back in January.

Ethereum Classic: The classic is not seeing much interest this week either. This crypto declined from over $32 to less than $20, before bouncing back up to the $22.50 level. Also in a strong trend lower, this crypto may need to see some serious buying come in to stop the onslaught.

Litecoin: This crypto is off some 10 percent on Friday, and also stands to end the week on the wrong foot. Like other currencies, the notion of further regulation has hit the currency hard, and it is in the grips of a firm downtrend. This crypto could potentially see a further dip down towards the $80 level before finding serious buyers.

Ripple: This crypto is back under the $1.00 level, and has also seen the effects of widespread selling in the crypto market. Currently valued at around $.85, it could fall even further before all is said and done. With no real previous price support levels, the market could even fall to a quarter or less before buyers are willing to step in again.

Any way you slice it, this week has been a tough one for cryptos. It may, however, also provide some fantastic opportunities for the long-term investor to buy currencies at what could turn out to be fire-sale prices. These markets are vulnerable to further regulatory action and will certainly have their share of headlines in the financial media. This could be a good lesson for investors, however. To reap the potential benefits that these currencies may eventually offer, you might have to be willing to tolerate some ups, downs and market volatility along the way.

Although cryptos remain on the defensive, that tide could turn quickly and significantly, and those who step in at current levels could potentially be rewarded over the long-run.

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