Second crash in a week spells doom for the cryptocurrency market
For those who thought last week’s calamitous fall could not be matched, think again. Investors were looking for signs of recovery at the start of this week as they expected a return to stability. However, the cryptocurrency market is experiencing yet another collapse, reflective of the recent fall that saw the collective market cap shave off $23 billion and drop to $160 billion – its lowest since late October last year.
In November last year, over $110 billion was added to the total market cap in just one month, after which it rose to an unprecedented high of $820 billion in December. The late-2017 bull run set a difficult benchmark for the following year, with the market stuck in a largely bearish trend for the majority of the year.
However, two severely bearish sessions within a span of six days saw the total market cap shave off over $20 billion in each session and coins plummeting to record lows. Triggered by a Bitcoin Cash [BCH] debacle and Bitcoin support level slip, the cryptocurrency market has fallen by a whopping 80.68% compared to its yearly high. The three top coins have retained their rankings on the global coin ladder by market cap, albeit a mere shadow of their past valuations.
Several analysts had forecast that Bitcoin would likely rise to as high as $9,000 by the end of the year, keeping in mind that a slip below a major support level at $6,000 could spell doom for the coin. However, last week saw the top cryptocurrency slip below this support level within a few hours, after weeks of hovering upwards of $6,500 since early September.
‘Something’s got to give,’ said many market experts who predicted that the weeks of peculiar Bitcoin movement could result in a very volatile BTC by the end of the year. As December grew closer, concerns in the market mounted and Bitcoin eventually fell victim to the bears brought about by the BCH hard fork, triggering last week’s market crash.
Bitcoin’s price fell below $6,000 for the first time in over a year, before ending last week at $5,500, with investors hopeful of a recovery the following week. However, the market’s performance on Monday quickly extinguished those hopes, with Bitcoin’s total market value dropping 12.6% to $86.67 billion in just a few hours.
The price of BTC fell below $5,000 to $4,842 and is struggling to make its way up. At press time, the premiere cryptocurrency was valued at $4,929, equivalent to its price in early October last year.
XRP, currently the top altcoin in the market, was the least affected major crypto on Tuesday. The coin managed to decline to its lowest level in three months, a relatively smaller drop compared with its rivals that fell to their lowest levels in either 12 months or this year.
The digital asset had been hot on the trail of Ethereum for over two months now, looking to overtake ETH as the top altcoin. Eventually, ETH took a major hit during the recent crash, leaving room for XRP to rise to the top. The market cap of both coins were separated by a gap of $100 million at the start of last week’s market crash. The gap has since widened to over $4 billion in just five days.
Ripple, a San Francisco-based blockchain firm, is behind the payments-focused cryptocurrency and has been the main reason behind XRP’s recent rise. In October, at the company’s flagship event Swell 2018, Ripple had partnered with Japan’s SBI Group and Spain’s Banco Santander to establish XRP-based payment platforms. Earlier this month, Ripple set up an office in Dubai, signaling its expansion plans in the Middle East and South Asia. This again lifted investor sentiment and pushed the coin higher while the rest of the market was trading in the red.
XRP’s total market value briefly crossed the $20 billion milestone early on Sunday, but slipped further on Monday. Monday’s collective crash saw XRP drop further, but the decline was not as bad as its rivals. At press time, XRP’s market cap stood at $19.91 billion, with its sights firmly set on crossing the $20 billion barrier. The coin rose to $0.52 prior to the second market crash, after which its price fell further to its current value at $0.493.
If ETH holders thought that the early September dip to $173 was bad, Tuesday spelled bigger trouble for the cryptocurrency. Ethereum has slipped to become the third most valuable digital asset and will likely stay there for a while.
Ethereum’s price had stabilized at $175 and has since fallen to below $150 – its lowest since May last year. ETH, in line with most of the market, has been falling since the start of the year. The virtual currency has lost 88.6% of its value this year.
Its market cap fell from $22.55 billion to just over $18 billion after last week’s collapse. Tuesday’s market crash has pulled the market cap down to $15.30 billion. At the time of writing, the coin’s market cap stood at $15.52 billion.
XRP’s marginal decline relative to Ethereum’s colossal drop has widened the market cap gap between the two to over $4.3 billion – more than the collective market cap of TRON [TRX], Monero [XMR] and Cardano [ADA].
1-Month chart of Ethereum [ETH] Price, Market Cap & 24-hour Volume
Image from Shutterstock
Charts from CoinMarketCap and Coin360
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