Crypto Market Stabilizes After Drop, Analysts Skeptical
As reported by Ethereum World News previously, on Wednesday morning, the jaws of crypto investors worldwide hit the floor, as Bitcoin (BTC) tumbled under $5,800 for the first time in months. Altcoins weren’t far behind the leading crypto asset, which now sits under a $100 billion market capitalizations, as EOS, Bitcoin Cash (BCH), Stellar Lumens (XLM), Ethereum (ETH), and Ripple’s XRP all saw double-digit losses.
This nascent market was so tumultuous that XRP ousted Ether as the industry’s second-most valuable cryptocurrency, with the former now being seated at Bitcoin’s right hand, as it were.
Although some have maintained their thought process that BTC, along with altcoins, is poised to undergo a rebound and trend reversal, some analysts aren’t so bullish. In fact, a number of industry insiders that spoke with Bloomberg have noted that crypto’s most recent collapse could be more detrimental than optimists may initially think.
Soichiro Tsutsumi, a trader at Tokyo-based eWarrant Japan Securities K.K. told Bloomberg that BTC’s foray under $6,000, a former floor and well-backed line of support, could be a “dangerous sign” for the short- to mid-term prospects of this market.
Rob Sluymer of Fundstrat Global Advisors echoed Tsutsumi’s analysis, explaining that Bitcoin’s move under $5,800 has put the digital asset’s long-term technical signals into the dirt, so to speak. He elaborated on the comment, noting:
This week’s breakdown produced significant technical damage… That will likely take weeks, if not months, to repair to create a durable enough price ‘structure’ to support a multi-month rally.
Interestingly, Sluymer’s comments are near-polar opposites when compared to the sentiment he touted just a few weeks back. Per previous reports from Ethereum World News, at the time, which was when bitcoin was seeing weeks of close-to-zero action, Sluymer noted that there was a growing “silver lining” in the cryptocurrency cloud. More specifically, the technician, who is in cahoots with Tom Lee, pointed out that low volatility, lack of volume, and positive divergences between large-caps and small-caps could be “encouraging.”
Regardless of his previous sentiment, indicators measured today, post-crypto crash, have only backed the crypto analyst’s point. The Directional Movement Index (DMI), for one, is reportedly at its largest negative reading since 2016, indicating that crypto could be slated to move lower.
This mirrors what Arthur Hayes, CEO of BitMEX, revealed in a recent edition of his exchange’s Crypto Trader Digest. Hayes, known for his controversial Bitcoin calls, and the startup’s crypto analysts explained that BTC has likely yet to bottom, drawing attention to $2,000 as a future price level to watch.
The bottom line is that everyone and their dog has different opinions about bitcoin’s recent move under $5,700, indicating that there were likely a number of stimuli that beckoned the bears in.
At the time of writing, BTC is valued at $5,625 a pop, with the asset posting a loss of 1.75% in the past 24 hours.
Although this lack of reversal is undoubtedly irksome, high levels of volume remain, indicating that volatility is likely to continue in the days, if not weeks to come.
Title Image Courtesy of Andre Francois via Unsplash