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Hard weekend for cryptocurrency

Feb 25, 2019

Despite the fairly strong collapse of almost all TOP-15 cryptocurrencies, the absolute majority of them finished the week with moderate growth. Despite the decline in value by more than 19% in the last 24 hours,  EOS has a record increase over 7 days – + 23.7%. This is the best result among all 12 cryptocurrencies with a capitalization of more than $1 billion. It should also be noted that Tether (USDT) is resistant to the overall negative in the market. Over the past 24 hours, the USDT shows very low volatility.

The outsiders of the week were Bitcoins SV (BSV) and Ripple (XRP), decreasing by 4% and 1.7%, respectively. It can be assumed that the decline was very weak, although it is not. Over the past 24 hours, marked coins have lost in price more than 12% each. On February 24, the greatest losses had Ethereum (ETH), EOS and Bitcoin Cash (BCH). All three cryptocurrencies have fallen by more than 20%. The corrective growth remains very weak, which increases the risk of their further decline in a short period.

The slump of the market

Throughout almost all February, the cryptocurrency market has shown good growth. During this time, BTC rose in price by more than $800 or 23.5%, while ETH added more than $64 or 60%. However, today we observe a quite significant decline in TOP-15 cryptocurrencies by capitalization. It is difficult to determine the exact cause of this powerful collapse. Opinions of analysts, traders and crypto enthusiasts vary, but there are some common points in them.

One of the versions is a technical factor – the inability of BTC buyers to continue the growth above the technical resistance level of $4200. ETH also tested the previous highs, the demand over which remains weak.

This factor indicates the weakness of buyers under very strong technical levels. On the other side, the marked resistance levels increase the activity of sellers. Those investors who bought BTC for $3450 and $3700 take profit from the technical resistance level of $4200. The situation is similar with ETH, buyers of the $103 level and above, actively fixed profit on long positions.

It is very important to understand that profit taking on long positions is short. In other words: to close a bought deal, you must sell. So,  selling associated with profit could collapse the market.

Another reason for active sales (profit taking) is a hard fork of Ethereum. More precisely, expectations of it. There was a number of problems faced by the ETH developers, so there is still the risk of another delay of a hard fork.

Investors can take profit on long positions before this important event. After all, not only the delay of this upgrade but the problems after its activation can put a lot of pressure on ETH. Therefore, there is still a risk of further moderate price reduction of ETH.

Bitcoin-ETF

One of the employees of the Korean Stock Exchange announced that the regulator will rely on the decision of the US Securities and Exchange Commission (SEC). Accordingly, it can be assumed that the approval of the Bitcoin-ETF can have very strong support for cryptocurrencies. Today the SEC is a leader, therefore, the approval of the investment instrument by the American regulator can be the starting point for other stock exchanges around the world.

“The US has been the front-runner on the cryptocurrency market and related derivatives, and there are strong voices supporting the launch of bitcoin ETFs within the market – which is why we are observing the progress and response of the US Securities and Exchange Commission’s decision on bitcoin ETFs”, – said an employee who wished to remain anonymous.

It is worth noting that another refusal of existing applications for creating Bitcoin-ETF can put a lot of pressure on BTC and the cryptocurrency market in general.

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