The cryptocurrency markets were all red for the past 48 hours, as massive selling took place that tumbled the forward price movement. The bleeding started on Monday, this week and it broke multiple support levels on its way down. The main reasons for the bleeding of the whole market was overselling. Currently Bitcoin and Ethereum are in an oversold condition, which signals the enormous selling volumes, but also that this is a good time to invest in Bitcoin and Ethereum for a short term profit.
This Cryptocurrency price analysis reflects the views of the author and is in no way an investment guide or investment recommendations. Let’s take a look if there are good buying opportunities with the cryptocurrency leaders. But first, what does a Bears market mean?
It’s a Bears Market, until the Bulls wake up
The market turns into a Bears Market when prices fall, due to fear, uncertainty and doubt (FUD), also pessimism and extreme hold of assets. When a market turns into a Bears market, the downtrend of prices becomes self-sustaining and the selling increases, because of FUD factors. A Bears market is not exclusive to cryptocurrency markets. Quite opposite actually, Bears markets are widely regarded towards Securities and stocks. The term Bears market means a market that has falling prices and it is the opposite of a Bulls market in which prices are rallying up.
It is not specified just how much the prices need to fall in order for the market to become a Bears market, but in stock and securities trading a drop of about 20% in one to two months is considered a Bears market. With stocks and securities, a Bears market can be triggered by a slowing economy and factors such as low employment, a drop in business profits and low disposable income. In cryptocurrency markets, a Bears market can be triggered by panic selling, induced by FUD factors, negative cryptocurrency news and others which spirals and snowballs the downtrend. And when the selling volume is bigger than the buying volume, prices go down.
Top 10 monthly volumes in this week’s Bears market
- Bitcoin (BTC) – $145,661,425,664
- Tether (USDT) – $77,949,686,784
- Ethereum (ETH) – $59,755,378,944
- EOS (EOS) – $40,482,610,432
- Bitcoin Cash (BCH) – $18,857,857,792
- TRON (TRX) – $9,954,525,904
- Ripple (XRP) – $9,259,146,992
- Litecoin (LTC) – $9,199,175,696
- True Chain (TRUE) – $4,972,008,720
- Ethereum Classic (ETC) – $4,908,570,768
Last week, Bitcoin looked stable. The digital currency was moving between 7,500$ and 7,700$ and it looked like Bitcoin is going to stabilize above the 7,400$ support level. However, massive selling started between 10th and 11th June and is continuing the descending channel. Since 10th June, Bitcoin dropped about 20% to under 6,200$ per Bitcoin, but was quick to recover back to the 6,500$ support level. This happened, due to the low Relative Strength Index of Bitcoin. For those that are not familiar, the Relative Strength Index signals if an asset (digital or other) is being oversold or overbought.
Bitcoin’s Relative Strength Index showed that Bitcoin was oversold during the crash. The Bears were crashing cryptocurrency prices and turned the market into a Bears market, but Bitcoin’s 6,200$ support level proved to be too strong and the digital currency started to recover, reaching 6,600$. Still, the Bears market has formed a strong descending triangle and the quick rebound could prove temporary. Either Bitcoin’s price will crash again towards the 6,100$-6,200$ with a possibility to break the support level and descend towards the 5,600$ mark or it will start a slow recovery process. Bitcoin’s dominance index stays strong at around 40%.
A bull run looks highly unlikely at the moment, as the Bears grip is too strong at the moment. It’s not impossible however, but the Bulls must take control of the Bears market. As always, altcoin prices are following Bitcoin and Ethereum, because their primary price is in Ethereum and Bitcoin price. Those prices form the fiat currency prices of all altcoins, but their prices depend entirely of Bitcoin and Ethereum. When both of them fall in fiat currency price, then the whole market follows and that’s why the last few days almost every cryptocurrency was red. Still, for long-term investors and “hodlers”, Bitcoin is still one of the best and most secure investments you can make in the cryptocurrency market.
As with Bitcoin, Ethereum’s price had fallen too with a similar price movement. Ethereum was consolidating at the 600$ mark, and was looking strong, but then the Bears market hit. Ethereum formed a strong descending triangle movement (as with all other cryptocurrencies, because they had almost identical price movement) and reached a low of 460$ per Ethereum after the extreme selling. The whole market capitalization had fallen below 265$ billion, but the current recovery returned 20$ billion to the market capitalization.
Ethereum was quick to recover from the crucial support level and is consolidating currently at the 500$ mark. As with Bitcoin, a bull run is unlikely in the near future, but is likely in the mid-term future. Ethereum and Bitcoin will remain range bound to each other and will move in a similar pattern for now. Another round of selling is also likely in which we could see Ethereum reaching the 400$ lows which will be devastating for the total cryptocurrency market capitalization. Panic is the theme of this week’s Bears market, as many investors are selling their positions on the low end of the spectrum.
But with such a decline in prices from December of 2017, I expect that the rebound from these lows will be just as strong, but will happen gradually throughout 2018. My expectations are that we are going to see the same or bigger highs this year, as history likes to repeat itself. Long-term investors should build their portfolio mostly when the market is weak like it is this week. This week’s lows could be an excellent opportunity for strengthening your portfolio. If Ethereum reaches 600$ in the following weeks, this is a 20% profit on the current Ethereum position.
Ripple has been one of the most underperforming cryptocurrencies from all the leaders. Since its explosion in price in December, Ripple has been mostly disappointing with its price declining gradually. Ripple was consolidating around 0,67$ but fell to 0,52$ in this week’s Bears market. Of course, these falls are Ethereum’s and Bitcoin’s fault as Ripple only follows them. But for traders, Ripple’s Ethereum price and Bitcoin price were also kind of disappointing.
Ripple has always been an “impulsive” cryptocurrency with most of its gains happening in massive bull runs, so as I said before history repeats itself and I expect that another Ripple bull run is right around the corner. Most of Ripple’s volume is being traded in South Korea, so a big part of the whole Ripple circulation is probably in South Korea. This can be interpreted differently of course, as sceptics would say that this Ripple centralization is the worst it could happen to the XRP cryptocurrency.
However, other believe that being in the hands of South Koreans could be a great thing, because if a good Bull run is executed properly, Ripple will most definitely explode in fiat currency price. Still, in my experience in day-to-day trading, Ripple is one of those currencies that are not pleasant to day trade with. But for long-term investors Ripple could bring a nice percentage profit, but the problem is that no one knows when. Currently, Ripple is traded at 0,55$ per XRP token and it recovered a bit from the lows. 0,55$ per XRP token could prove very profitable if Ripple reaches the highs from last year, something that I believe will happen.
In Bear market times, everyone is running towards Tether for hedging opportunities. That’s why from more than 6 months, Tether is second in trading volume right after Bitcoin. Many investors still consider Tether a scam coin and are not even considering its high trading volume. But, in times of declining cryptocurrency prices, many investors are quick to transfer their wealth in Tether to hedge any decline in prices. The scam opinions are not unjustified, as there is not an official audit on Tether that will conclude that every USDT token is dollar backed. Furthermore, Tether had promised and lied about not creating more tokens. But they did this 3-4 times this year alone. Click here to read more on the last time Tether created more tokens, which was not a month ago.
For those that still don’t understand how this happens, picture this: If you have Ethereum at 600$ and you expect the market to crash or there are signals of that happening. You can sell your Ethereum for about 600 USDT tokens. The markets crashes and Ethereum costs now 480$. With 600$ you can buy more than 1 Ethereum or around 1.2 Ethereum which is an instant 20% profit from hedging your money. That’s why in times of stress and selling, Tether not only explodes in volume but it increases in price. During this crash, Tether was 1.02$ at one time which signals the enormous conversion in USDT tokens.
But if cryptocurrencies were a bad investment, institutions and corporations wouldn’t have interest in them. But the increased interest in cryptocurrencies and blockchain technology, means that even corporations had woken up on the new revolution. With the increased interest from institution and the money that will enter the cryptocurrency industry, we could see even bigger highs this year. This is not relevant to Tether, because Tether is always a dollar, but another stable coin that is backed by Goldman Sachs, is entering the industry. Circle will be the biggest competition to Tether and it will be interesting to follow the development of the Stablecoin battle. If you want to read more on Circle, click here.
EOS recently finished its Initial Coin Offering stage and released their highly anticipated platform – EOSIO. The hype around the project is so high, that this week’s Bears market did not affect that much the EOS token. EOS price dropped below 10$ for a short period, but was the quickest to recover and is currently trading at more than 11$. EOS hype can be felt in the EOS trading volume, because it’s one of the highest this month. An interesting fact is that when the drop started, EOS trading volume nearly doubled, signaling that the hype around the project is stronger than the Bear’s grip.
EOS is a great project and if you want to read more on it, click here to read our EOS analysis. EOS could be the biggest competitor of Ethereum and the EOS token might be a great long-term investment. For day-to-day traders, my concerns are that the Initial Coin Offering stage has ended and this leaves the EOS ecosystem vulnerable to dumps. The EOS ICO was a year-long and some investors have invested when the project was less than 2-3$.
This is a vulnerability that stops me and other day-to-day traders on trading EOS, but for a long-term investment I think that EOS is one of the best (after Ethereum and Bitcoin). Another concerning thing is that the top 10 EOS wallets are holding almost 50% of all the tokens. A big whale could single handedly crash the entire EOS price movement. If you want to see more information about the richest EOS wallets, click here.
Conclusion on the Bears market
When the market crashes, it opens up new opportunities for cheap cryptocurrency entry points. People that want to enter the cryptocurrency economy had a great opportunity to enter cheap. This doesn’t mean that there won’t be another opportunity like this. Long-term holders need to buy as cheap as possible so they can increase their profit margins. For cryptocurrency traders, these crashes are excellent opportunities to make quick profits if they know what they are doing. The market is full of opportunities and educating yourself will increase your chances of success.
On their way to recovery, Ethereum was quicker than Bitcoin to recover and Ethereum’s Bitcoin price increased dramatically. This is a great chance for traders that trade the Bitcoin/Ethereum trading pair to make a quick 9.2% profit in less than an hour or two. We will continue to give you great cryptocurrency analysis and if there are opportunities for buying. But investing, without taking your time to educate yourself is the quickest way to lose your money.
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