Cryptocurrencies continued to see selling pressure this week, and with the technical picture growing even more bearish, further selling may be seen in the sessions ahead. Bitcoin in particular is having a rough year thus far, and it seems to be dragging down other cryptos along with it.
According to an article by money.cnn.com, Bitcoin has shed about 50% of its value so far this year. The article states:
“The digital currency has slumped roughly 50% since the start of the year, dropping below $7,000 on Friday morning in Asia. Less than four months ago, it was trading close to $20,000.
The latest losses follow moves to step up regulation of cryptocurrencies in Europe and Asia.
In Japan, two virtual currency exchanges closed down this week amid increasing scrutiny from the country’s financial services watchdog. The trading platforms, Mr Exchange and Tokyo Gateway, both failed to secure a license from Japan’s Financial Services Agency.
The “regulatory clampdown in Japan is a massive negative,” said Stephen Innes, head of Asia-Pacific trading at currency broker Oanda.”
The heavy selling seen in Bitcoin and its epic fall from the highs seen just a few months ago has been a major weight on the asset class as a whole. It is quite likely that cryptos will not be able to mount much of a turnaround unless Bitcoin is able to turn the tide. One positive from the ongoing selling, however, is that the market has now likely driven out many of the speculators that helped fuel a rapid price rise to 20k. With many of the speculators out of the market, it may potentially be able to find a bottom and begin a more sustainable ascent higher.
Bitcoin: The king of cryptos dominated much of the headlines this week, as its recent sell-off continued. The market declined over the last week or so from around the 9k area to less than 7k. Some previous key technical levels have now been broken, and the deteriorating technical picture could invite even more selling before a long-term bottom may be found. On the flip side, however, Bitcoin may be closer to to such a bottom now that many of the specs and weak longs have likely been shaken out of the market.
Bitcoin Cash: This crypto also saw declines over the last week, dropping from over $900 to less than $700. Friday as a nasty day for the currency, as it saw a decline of nearly 9% as the selling accelerated. Certainly the pressure on Bitcoin has been a part of the negative sentiment in this and other cryptos, but it is also simply lacking any fresh bullish inputs currently to mount a significant rally.
Ethereum: This crypto declined from around the $550 level to less than $400. Price action this past week was definitely bearish, but the bigger picture is also likely alarming to investors. The market remains in a firm downtrend, and has thus far shown few signs of a possible turnaround.
Ethereum Classic: This crypto also saw selling as broad-based pressure took the sector lower. This crypto did, however, break lower from its previous trading range of $16-$22. The market ended the week around the $14 level, and looks as if it could be on the verge of another significant leg lower in value.
Litecoin: This crypto seems unable to mount another sharp rally, and recent action could suggest more weakness ahead before a market bottom may be found. The currency is in the midst of a strong downtrend, and the ongoing lack of any fresh bullish inputs may fuel further selling.
Ripple: This crypto is now trading at less than $.50, and the chart looks weak. Given how far prices have fallen and the fact that the currency is valued at a low level, it simply does not have much further to fall. Although the currency could technically go to zero, it may find buyers willing to scale into long positions as prices continue to decline.
The past several weeks have been very challenging for the cryptocurrency markets. Despite the significant declines in price, however, some of the current price levels could potentially represent an excellent long-term value for the patient investor. In addition, with much of the market’s “frothiness” now removed, prices may be able to begin to build a long-term base from which values may potentially begin to climb again.