Over the past 24 hours, the cryptocurrency market dropped more than $22 billion, falling from $343 billion to $321 billion in market valuation. Bitcoin fell by 5 percent, while other major cryptocurrencies recorded larger losses, dropping by more than 7 percent.
What Triggered the Drop?
On previous reports, CCN emphasized that while the cryptocurrency market has somewhat stabilized in terms of price movements, the volumes of most digital currencies remained relatively low. Bitcoin’s volume has not been able to rebound past the $5 billion mark, leading investors to become uncertain about the short-term future of the cryptocurrency market.
The bitcoin price initially seemed to be bottoming out at $7,500, building momentum around the $7,600 region and breaking the $7,700 mark. While prominent investors and experts including Peter Brandt suggested a short-term rally for bitcoin, the volume of bitcoin failed to pick up, disallowing bulls from taking over the market.
The prediction of Brandt was also conditional, as it relied on the BTC volume to increase substantially along with its movement on the upside.
Given that the price of BTC has dropped below the $7,300 mark and entered the $7,200 region, a further drop to $6,900 is more likely than a swift rebound to the $7,700 region. If the volume of BTC does not spike in the next 24 hours and BTC falls to the higher end of the $6,000 region, an entrance to $5,000 is also a possibility.
Previously, cryptocurrency researcher and analyst Willy Woo predicted a slow bleed out from $7,500 to $6,500 and eventually to $5,500, mostly due to the low volume of BTC and the high volatility of the market.
“I think we are gonna go to $5,500 – $5,700 next, I can’t see $7000 holding. Most likely we’ll balance a bit, then we’ll slide through. Long timeframes here, looking into June for rough timing of this to play out at a best guess,” Woo said on May 25, adding, “Volatility is still too high. I’m looking for a sustained low band of volatility which tends to be a signal for the end of the detox and the next accumulation phase. It’s still got some time to ride down.”
Short-term skeptics including Woo are still optimistic in the mid-term trend of BTC, as it is possible for BTC to experience a bull run triggered by a mania set up by institutional investors such as pensions and hedge funds in the upcoming months. But, because robust custodian solutions are necessary for institutional investors to commit, it is unlikely that institutional investors come into the cryptocurrency market before the fourth quarter of 2018.
BTC Fall Will Trigger Alts to Plummet
If BTC falls below $7,000 and eventually to the lower end of $6,000, alternative cryptocurrencies and tokens, especially those with smaller market caps and volumes, will drop substantially in value, as tokens tend to experience intensified movements on both the upside and downside.