Why Did the Cryptocurrency Market Clear Out $16 Billion and Fall Around 9% on February 24?

Bitcoin (BTC) has experienced an important growth a few days ago when it surpassed the $4,000 barrier for the first time in more than a month and for the second time this year.

However, once it reached $4,200, Bitcoin fell around 9% as well as the whole cryptocurrency market. The main question that enthusiasts are now asking is why the market fell abruptly after reaching $4,200.

Why Did The Crypto Market Fell?

One of the most important things to understand is that when the price of an asset grows for a long period of time without correction, it will eventually drop fast. In over an hour, the whole cryptocurrency market lost $14 billion. Meanwhile, Bitcoin reached $3,800, previously resistance and now a key support level.

On February 24, the total market capitalization of virtual currencies was $141 billion. A few hours later, virtual currencies dropped and reached $127 billion. Now, the whole cryptocurrency market has a market capitalization of $130 billion.

This shows that the cryptocurrency market is not showing any signs of reducing its volatility. This was the largest dump of the year and that ended with the positive sentiment that the market had when bitcoin crossed $4,000.

The prominent cryptocurrency analyst Murad Mahmudov compared the price action experienced during the last three months with what happened between October and November 2014.

However, at that time, Bitcoin fell more than 50% from $440 and was traded close to $170. Moreover, Mahmudov goes back to 2011 where he found a similar pattern in which he says that the bear trend had a similar structure pre-capitulation.

Another cryptocurrency trader and expert, Alex Krüger, wrote on Twitter that the dump that the cryptocurrency market experienced was just a simple correction. He mentioned that prices have been growing for over two weeks without a pullback.

This is why most of the virtual currencies dropped so hard in so short period of time.

In the future, there will be many other corrections, as it happens in every single market. Assets cannot just go higher and higher without falling later. Additionally, the 50-week moving average has dropped under the 100 week moving average.

This bearish crossover happened back in 2015 when the bear market was arriving at an end. After this, space could start recovering and Bitcoin could recover part of the price lost once again.


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