The crypto space is taking another beating today. The collective market cap of all cryptocurrencies currently stands at just over $347 billion from a high of $373.6 billion yesterday, for a fall of 7.1% across the sector in less than 24 hours. The news isn’t all bad though, in that bitcoin (BTC-USD) is actually holding up rather well compared to its peers at the top of the digital currency food chain.
The king of blockchain currencies is down only 3.77% today, compared to runner up ethereum (ETH-USD), down over 9% on the day, and bitcoin cash (BCH-USD), down close to 10% so far. Ripple (XRP-USD) is the runner up, down only 6.5%, and bringing up the rear in the top 5 cryptocurrencies by market cap is EOS (EOS-USD), down over 11%. The relative strength in bitcoin itself today could indicate stabilizing forces coming in to support the more relatively liquid cryptocurrency, which could be a sign of a maturing market and the beginning of the weeding out of weaker counterparts.
The continued down move in the space should not be particularly surprising given the weak short term technicals on long term charts. Collectively, all digital currencies have retraced about half of the post crash bounce, which bottomed at around $249 billion in total market cap. From current levels, that means a fall of up to 29% could still be ahead of us, assuming that a double bottom holds, established back in early April. If that bottom is successfully tested, cryptocurrencies may have established a long term trading range, but what happens if and when support is tested remains to be seen. If that bottom doesn’t collectively hold, the sector could come under immense selling pressure, flushing even early speculators out.
There appears to be little correlation between fiat currency markets and cryptocurrency markets as of yet, and in order to establish one, bitcoin may have to solidify a trading range that would allow traditional currency traders to enter the market. Crypto traders still seem to be mostly isolated from traditional markets. This is why, from a long term perspective, a successful test of support would be healthy for the sector as it could bring new speculative capital into the fray.