The crypto correction that everyone has been waiting for has finally kicked in today. Markets are a sea of red and Bitcoin tumbles ten percent and altcoins get hammered. The move is not entirely bearish however and will present new support zones and entry levels for traders and investors.
What Goes Up Must Come Down
Bitcoin and crypto markets have been on fire in May. Since the beginning of the month markets have surged over 50 percent to reach a ten month high of $264 billion. This epic rally has been largely driven by Bitcoin which has dominated markets as it surged above $8,000 when most expected it to stop at $6,000.
With such rapid gains come equally violent dumps as day traders take profits and sell orders are triggered. This is exactly what has just happened to Bitcoin a few hours ago. During early Asian trading BTC dumped from just below $8,000 down to $7,175 according to Coinmarketcap.com. The ten percent slide has pulled the entire market down with it as total capitalization shrunk by $30 billion.
As expected the altcoins have been hammered even harder with many dropping double figures. Following a couple of days of solid gains, XRP, Stellar and Cardano have dumped around 14 percent each today. Bitcoin Cash, Litecoin, EOS and Binance Coin are not faring much better as the all lose over 9 percent on the day.
Total market capitalization dropped from its 2019 high of $264 billion to around $230 billion as the exodus accelerated.
A number of industry observers are still bullish though and see this correction as a healthy part of market cycles. Many are looking for new buying opportunities at BTC support levels. Analyst fil₿fil₿ said;
“Would like a bounce at $6.4k but i fully expect a 61.8% retracement from top which may present the last great buying op. @ c.$5.2k”
$6,400 was the most traded price of 2018 so a major correction could find support at this level. Moving averages have traditionally served as levels of support and resistance and the 50 day one sits at $5,500 at the moment. On the lower side the 200 day MA is at $4,400 but a drop to here would be extreme.
At the time of writing Bitcoin had already started to recover from its intraday dip and was trading at $7,300. Further losses are expected though as Europe and America wakes up to a red Friday in crypto land.