Cryptocurrencies continue to try to tread water, as a lack of any fresh bullish catalyst has taken a toll on prices. Even with some increased stock market volatility this past week, the bulls have not been able to generate much at all in terms of a rally. Some might consider the latest round of selling good news, however.
The recent selling in cryptos may actually have a bit of a silver lining: many of the speculators may have finally thrown in the towel. A lack of speculators in the marketplace could finally pave the way for more serious, long-term investors and users to put together a more sustainable and gradual rally.
After surrendering the $8,000 level on May 22, the price of bitcoin, the world’s biggest digital currency, has traded in a tight range around $7,500, and the lack of follow-through to the downside is a good sign for owners of bitcoin, said one analyst.
“When we have broken key levels, we haven’t seen the continuation moves like we did in April with people getting liquidated,” said Mati Greenspan, senior market analyst at Etoro. “It seems the leverage positions have been chased out, which means people are buying it because they need it.”
Greenspan cited countries such as Venezuela and Argentina, where there is a real demand for bitcoin as a convertible currency and a store of wealth.
The idea of specs getting flushed out before the market starts to rally is nothing new. This is often seen in markets as they approach “bubble” territory. Once the bubble finally bursts and prices come back down, long-term investors and users may step in and start buying at more desirable levels.
Bitcoin: After breaking down below the 8k level, Bitcoin has been trading between the $7100 and $7600 levels. The market has seen a bounce off of the recent low around $7100, but still remains vulnerable to further selling pressure. The larger time frames do look yet look constructive, and the market could potentially see a longer consolidation phase before it is able to mount some sustainable upside. Speculators could jump back in if the currency is able to take out some key levels on the upside.
Bitcoin Cash: This crypto saw a drop to around the $880 level before seeing a decent rebound of over $100. The market is set to end the week on a weak note, however, as it is still below the 1k level. Like many other currencies, it is still in a firm downtrend and may need to see some significant upside to reverse recent chart damage.
Ethereum: This crypto declined this week from about $600 to a low under $525 before finding some buying interest. The market is slightly lower to end the trading week, and further selling could be seen next week. The absence of any fresh bullish news has kept buyers at bay, and the market may even need to see another significant dip before finding a long-term bottom.
Ethereum Classic: This crypto has traded in a tight range in very choppy action. There has not been much to get excited about for this currency, and prices may need to see further downside before reaching a long-term bottom. Of course, the currency could also benefit from an overall uptick in the sector or any fresh bullish developments.
Litecoin: This crypto has also traded in a tight range this week, and is also looking bearish on the larger charts. While many of the specs may have been flushed out in recent weeks, the market could still see further selling that could potentially fuel a decline to $80 or lower before finding a bottom.
Ripple: This crypto traded in about a six cent range all week, and seems to have found some buyers around the $.60 level. The market has given up gains seen after rallying off the recent lows, and its inability to sustain a significant rally is likely a cause for concern. The currency has been battling a lack of fresh, bullish news as well as an overall negative sentiment across the sector. Trading for well under a dollar, the currency may have to put together a significant rally before attracting more buying interest.