The crypto market’s all-time highs are just a memory. The summer slump now seems to be deepening into something more disturbing. And it’s not so far-fetched that Bitcoin may give back all of its gains since the first quarter if bears continue their rampage.
Gird yourselves, it’s white-knuckle time in crypto.
On Tuesday, Bitcoin had skidded 3.5% to $29,725, breaking through the important psychological floor of $30,000. Ether, meantime, clocked in at $1,783 in mid-day trading Eastern Time, and is down almost 13% in the last seven days, according to data from CoinGecko.
While there are signs the tokens are finding new levels in choppy trading, step back and the landscape looks bleak: Bitcoin has lost half of its value since its all-time high of $63,000 on April 16. Ether has fared worse — plunging 57% since those heady days in May. Tokens of the leading DeFi protocols Uniswap, Aave, and Maker, have also swooned — UNI has lost a quarter of its value in the last 14 days.
Crypto veterans say an influx of bearish signals are to blame for the sell-off. “Just combine weak demand with the current fundamentals,” says Kevin Murcko, the founder and CEO of CoinMetro, an exchange based in Estonia. “The Delta variant, regulatory news, and the general summer lull… all this gives us a lower range-bound market that puts weak hands under pressure.”
It seems an end is truly at hand to a giddy 12-month stretch that saw Bitcoin recapture the imaginations of investors, especially younger ones, and surge from $9,163 a year ago to five-digit heights.
Over the last 10 weeks, the overall cryptocurrency market has shed more than half its total market valuation, to $1.2T, according to CoinMarketCap data. One metric investors will be watching closely in the days to come is volume — how many traders have just pulled up stakes for good?
The latest dive came at the same time the S&P 500 dropped 1.6% on Monday largely on Delta variant fears (though don’t discount inflation concerns, either). On Tuesday, the S&P rebounded in mid-afternoon trading Eastern Time. Plus, DXY, the dollar index, has continued to crawl upward since the mid-May crypto market peak — it’s at 93.03 at the time of writing, just shy of its six-month high of 93.30 on Mar. 30. Investors typically flee to dollars when markets drop.
You want a silver lining? Well, the markets did stabilize at about noon Eastern Time, with Bitcoin, Ether and other tokens arresting their falls. And USD stablecoins remain resilient, meaning fiat currencies haven’t fled the crypto space altogether. But don’t hang your hopes on that respite for too long, warns Murcko.
“Markets have a way of revisiting resistance, and the $20K area is like a magnet given it was the all-time high for three-plus years,” says Murcko. “Keep that in mind as you try and navigate this market.”