Over the past 24 hours, more than $14 billion has been wiped out of the crypto market as Bitcoin (BTC) dropped by five percent.
Bitcoin, the most dominant cryptocurrency in the market in terms of price, market cap, and volume, demonstrated the smallest loss out of all major cryptocurrencies. Bitcoin Cash (BCH), Ethereum (ETH), Ripple (XRP), Stellar (XLM), Litecoin (LTC), EOS, and many other cryptocurrencies recorded losses in the range of 7 to 15 percent.
Why is Crypto Tanking?
Cryptocurrencies have been in a bear market since January 2018 and have not initiated a proper mid-term recovery since then.
The $6,000 level of BTC was well defended for more than six months and each time BTC dipped to the range of $5,800 to $6,200, it rebounded back to the mid-$6,000 region.
This week, as CCN reported, BTC had two possible scenarios: defend the $6,000 resistance level by turning it into a support level with strong short-term momentum or risk falling to the lower region of $5,000.
“Based on current market conditions, a significant surge in the price of major cryptocurrencies is highly unlikely. But, a gradual increase in price due to the anticipation towards Bakkt until early December remains a possibility, especially if Bakkt gains traction among investors in the regulated US market,” the report read.
BTC was in a difficult position to eye a short-term breakout to $6,000 given its low volume and the intensity of the crypto market crash on November 15.
Hsaka, a cryptocurrency trader and technical analyst, said that in the days to come, a retest of $5,600 is likely, expecting a recovery from the low $6,300 mark.
“Could be forming a nifty little range here. Swept shortstops and tested range bottom. Swept long stops. Now if price can reclaim the zone around $5,400, a retest of $5,600s looks likely.”
As BTC, which maintained stability from August to November, dropped substantially against the US dollar, other major cryptocurrencies struggled to sustain momentum. Even Ripple, which experienced a decent 8 percent climb against the US dollar on November 18, fell by around 7 percent, deleting yesterday’s gains.
US Stock Market Struggles Not Helping
Major technology stocks like Nvidia have seen a drop in the range of 10 to 30 percent as the US markets started to demonstrate a lack of momentum.
CNBC reported that 25 percent of wealthy investors in the stock market believe the US market will see an end of its bull market.
“These are more experienced investors, sitting tight and staying the course. Any near-term noise is never a good idea to make wholesale changes. Over longer periods of times these events are less meaningful,” said Mike Loewengart, chief investment officer at E-Trade Capital Management.
The drop in the value of equities, stocks, and other traditional investment vehicles have fueled the drop of cryptocurrencies, which to the eyes of investors in the finance sector remain as high-risk, high-return trades.