Crypto Bloodbath as More Than $30 Billion is Wiped off Market from Sell-Off
This week has seen one of the worst-performing days of 2019 for the cryptocurrency market, as digital assets experience a massive sell-off of over $30 billion, with major coins like Bitcoin plummeting by more than $1,000 before stabilizing at $8,300, shedding 17% of its initial value this week.
Along with this backwards slide for Bitcoin, significant coins like Ethereum and Litecoin also saw losses of more than 15% and 20% respectively before bouncing back at what is beginning to look like their new support levels.
Does this descending triangle come as a surprise? Not according to Goldburg's Peter Schiff, who sees the reversal as being in the making for some time. And spells a broader, and more unfortunate correction by a further 50% for Bitcoin and others:
“Bitcoin has finally broken below the support line of the large descending triangle it has been carving out for months. This is a very a bearish technical pattern, and it confirms that a major top has been established. The risk is high for rapid descent down to $4,000 or lower!”
One of the interesting points from this week is that XRP experienced a massive dip in liquidity as more than 250m XRP were moved from anonymous wallets, according to Whale Alert.
Meanwhile Tether actually successfully overtook Bitcoin Cash during the tumult, making it the 4th largest cryptocurrency, and the largest stablecoin.
Crypto Futures Responsible for Drop?
So what can we attribute this bearish descent to, exactly? Investors have pointed to the recent launch of Bakkt's Bitcoin futures contracts for institutional investors. To the outside observer, these developments would seem divorced from one another.
That is, of course, until you look back at the kind of reversal experienced by the crypto market after the introduction of futures to the Chicago Exchange in November 2017.
This mixture of speculative futures trading, along with Bakkt's unfortunately lackadaisical performance over this week has, therefore, if this theory is to be believed, undermined confidence in cryptos and contributed to this sell-off.
To attribute this to just one factor would be a little irresponsible, however. As Schiff argued, Bitcoin, among other cryptocurrencies, has been trading sideways for a matter of weeks and may have been due for a correction.
This position is substantiated by other arguments made that Bitcoin's positions are ‘overbought,' making a correction inevitable.
Doom and Gloom? Or Rays of Sunshine?
While Schiff is adamant about the trajectory of Bitcoin in the coming months, opinions are much more scattershot about where it, and the crypto market, are heading.
The more unpopular of these opinions come from Fundstrat, which concludes that Bitcoin won't be breaking a new high until you see the same from the S&P 500 – the USA's industrial index.
Unpopular opinion, Bitcoin won’t make a new high until S&P 500 makes a new high.
– $BTC has been rangebound because macro trendless. Confirmed by our Bitcoin Misery Index falling from 66 (50 now)
— Thomas Lee (@fundstrat) September 12, 2019
More optimistic investors like Clem Chambers of Intelligent Investing, for example, who believe that the ongoing trade war between the US and China, will mean ‘good news' for long-term HODL-ers.
Time will tell if this turns out to be accurate, however, as Chambers concedes.
“This is only a theory, but if it is correct, bitcoin will either rally vertically if no news breaks or the news will appear very soon. This is being written at 12 p.m. GMT September 25 and the news ought to be out there by no later than the end of the week.”