With the crypto market suffering a harsh correction, many are waiting on the sidelines for either a possible further leg down, or the potential green shoots of recovery. Global markets may have a say in where crypto goes, at least in the short to medium term.
The ongoing bitcoin and cryptocurrency correction has still not seen the usual bounce from such a heavy downward swing. Many did not see this coming, and therefore would not have been able to take profits beforehand, reducing their firepower with which to start buying the dip.
In an article on Fortune, chief market strategist Matt Maley commented:
“Buying the dip did not work well last week, so the retail traders could be pulling in their horns a bit. Since they have been so important to the demand side of the supply/demand equation this year, their absence is an unwelcome development for the bulls.”
Meanwhile, Bitcoin continues to trade in a range between $47,000 and $49,500. Even though it appears to have held the 200-day moving average, traders are likely still jittery, and waiting for a sign that will point to a move in either direction.
Cathie Wood’s ARK Innovation fund is down 13% so far, its worst week since much earlier in the year. Also, the recently named Meta Platforms Inc. much heralded by MarK Zuckerberg, CEO of its parent company Facebook, has lost around 8% of its value over the week.
Cryptocurrencies in the shape of altcoins have suffered much worse. Total Market Cap 3, which is the combined value of all altcoins minus Bitcoin and Ethereum, moved downwards in a 4-day plunge that saw it lose a third of its value, at 33%. It’s currently reduced this loss to 22% at time of writing.
Altcoins that have individually suffered some heavy losses include Polkadot. For the DOT token to be 55% down from its high of $55 in early November is quite a shock considering that the Ecosystem is currently holding Parachain Slot Auctions.
Solana, a huge competitor to Ethereum as a layer 1 blockchain, saw a swoop down to $170 from a local high of $243 only five days previously. However, Ethereum itself is holding up relatively well, reducing a 26% fall to a somewhat rosier position of 15% at time of writing.
It appears that the confident predictions of about a month ago, where Bitcoin was supposed to be climbing to $100,000 by the end of the year, are not going to pan out.
However, this is definitely short termism and a lot of trader talk. Looking at the fundamentals of Bitcoin and some of the altcoins, there is potential for more growth over time. Investors who have strong convictions will likely not be looking to sell this dip any time soon.