Cryptocurrencies continued to consolidate over the last 24 hours, which could be seen in part a characteristic of the way that the prices typically move during holidays. However, the global cryptocurrency market underwent a correction of around 40% over the weekend, showing a riotous end to the year.
Things could get worse, with prices are still unable to take out the short-term resistance at around $15,000 which has capped the market’s recovery on Saturday.
The total value of the 1380 digital currencies tracked by CoinMarketCap.com declined from close to $650 billion on Friday to $545 billion on Monday morning. The dip could be seen just a correction after a wild rise for the crypto market - the total value of all assets in the space grew by more than 100% in the first three weeks of December alone.
Bitcoin touched $20,000 on some exchanges and with the psychological level met the market panicked with traders taking profits off the table. The biggest and best-known cryptocurrency went into free fall on Friday as the price pulled back to $10,700 before staging a 50% rebound. It has then continued to decline in value, now standing at $13,500, down more than $700 from a high of $14,289 hit earlier today.
The rest of the segment is also in a consolidation mode today, with Ethereum leading the way higher, already getting close to the $750, but still needs to overcome crucial resistance at $780. Dash, NEO, and NEM all broke below major technical levels over the weekend while Ripple, IOTA and Monero are looking slightly more resilient amid the broad decline. And Litecoin also down, dropping to roughly half of the all-time high they reached earlier this month.
In the futures market, Cboe’s one-month derivative was earlier halted due to the massive price drop, while futures trading on the CME hit the limit down threshold.
Merely Technical Headwinds
Markets moving up so quickly with such uncertainty are naturally going to be subject to huge bouts of volatility. The price has been surging since mid-November and the major technical correction though has only taken us back to the valuations from early December.
In addition, the crypto community has previously seen periods of consolidation followed by a bit of correction, and then a move up once again followed by breakout and consolidation. This has been the price pattern over the last few months. However, the massive daily range makes it almost impossible to manage loss risks even if traders don’t get greedy and find out the right levels where they should be entering into or exiting the trades.
Other major factor that could have influenced the short-term price trend of cryptocurrency is subdued activity of ICOs as investors could be hesitant to make big bets ahead of Christmas and New Year holiday period. Token sales, where startups issue their own digital coins to raise money, have helped fuel the surge in the cryptocurrency market so far this year, with over $3.5 billion raised using ICOs.