Bitcoin broke below US$4,000 and extended its 2018 crash to within striking distance of the biggest cryptocurrency’s worst bear markets.
The virtual currency conceived just over a decade ago slid as much as 14 per cent to US$3,675 on Monday, bringing its decline from last December’s record high of almost US$20,000 to about 80 per cent. All nine of its largest peers tracked in real time by Bloomberg fell, with drops ranging as high as 21 per cent for Monero.
This year’s collapse, which has ensnared rival coins like Ether and XRP, is entering the same league as Bitcoin’s 93 per cent plunge in 2011 from its previous record high, and its 84 per cent rout from 2013 to 2015, during the collapse of Tokyo-based crypto exchange Mt.
Gox. In dollar terms, the damage has been even bigger this time around: Virtual currencies tracked by CoinMarketCap.com have lost more than US$700 billion of value since the market peaked in January.
This has been the worst week for cryptocurrency since the bubble burst, with losses now at $700 billion ‘It’s getting nasty’: No end in sight for cryptocurrency sell-off as Bitcoin breaches $4,250 ‘I didn’t sleep well last night’: Bitcoin’s slide just the beginning as analysts brace for a 70% drop “There’s an element of almost shock: there’s nothing to suggest the sell-off is over,” said Craig Erlam, senior market analyst at securities firm Oanda Corp.
in London. “This was a market primarily driven by sentiment since last year, and it’s since been completely destroyed.”
While bulls are betting that demand from institutional investors will stabilize prices, most big money managers have stayed on the sidelines amid concerns over exchange security, market manipulation and regulatory risk.
The sell-off is “really testing the faith of a few key players,” said Ryan Rabaglia, Hong Kong-based head trader at OSL, a cryptocurrency dealing firm.
“For this next push, we are going to need that institutional money to come in finally. To lend that support and help with growth.
”
This was a market primarily driven by sentiment since last year, and it’s since been completely destroyed
Craig Erlam, senior market analyst, Oanda Corp Oanda’s Erlam is among strategists who say traders confidence was shattered after Bitcoin crashed through US$6,000 earlier this month. The level had seemed to be a genuine support for the token all year and likely to have encouraged traders to put stop loss orders just below it.
Other technical measures suggest more pain to come. The DVAN Buying/Selling Pressure Gauge is the most oversold and showing the strongest negative divergence since the May sell-off. In addition, the current price of Bitcoin is still far below the trend line indicating the selling pressure will widen further, which could indicate further losses to come.
“When US$6,000 broke, you had an element of stops being taken out, but there are more factors at play,” Erlam said. “There are investigations, the hard fork of Bitcoin Cash knocked people’s confidence, volatility is back, and institutional money hasn’t really flowed in.
The next line in the sand looks like US$3,000.”
–With assistance from Kenneth Sexton (Global Data).
Bloomberg.
com
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