The cryptocurrency market has dropped by more than $42 billion in the last three days, from $412 billion to $370 billion. The daily trading volume of the market also declined by around $3 billion, from $22 billion to $19 billion.
Earlier today, on May 18, the bitcoin price dipped below the $8,000 mark, entering the $7,000 region for the first time since mid-April. Traders that expected the Blockchain Week in New York and the Consensus 2018 event, the largest cryptocurrency conference in the world, to push the cryptocurrency markets upwards throughout May. However, the downtrend of bitcoin after falling below a key resistance level at $8,200 was too strong for bitcoin to regain any sort of momentum and immediately bounce back.
Throughout this week, CCN reported that the $8,200 resistance level and $8,800 support level of bitcoin are two important thresholds traders have to keep a close eye on because breaking either one of the two levels would result in the bitcoin price re-entering the $9,000 region or the $7,000 region.
On May 18, the bitcoin price reached a daily bottom at $7,925 and both simple and exponential moving averages demonstrated strong sell signals even at the $7,925 mark. However, the Relative Strength Index (RSI) of bitcoin signified oversold conditions for bitcoin, allowing the dominant cryptocurrency to rebound to $8,100 temporarily.
Currently, at the time of reporting, the price of bitcoin remains above $8,100. If bitcoin fails to recover beyond the $8,200 mark throughout the day, it could result in bitcoin testing the $7,800 resistance level, which could potentially lead bitcoin to the lower end of the $7,000 region.
What Caused the Market to Slump?
As Brian Kelly, the founder of BKCM and regular contributor to CNBC’s Fast Trader, previously said, the cryptocurrency market’s recent performance has failed to reflect significant progress that has been made in the cryptocurrency sector over the past week.
In May, the New York Stock Exchange (NYSE), Goldman Sachs, JPMorgan, and Morgan Stanley have confirmed their development of bitcoin and cryptocurrency-related platforms which clients can utilize to invest in the cryptocurrency market.
Initially, when the cryptocurrency market did not react to the NYSE’s leaked plans to establish a proper bitcoin exchange, Kelly said:
“I’m actually a bit shocked that the market did not pick up on this. Dominic Chu of CNBC said that investors will get physical delivery of bitcoin. That doesn’t sound that interesting except for the fact that it means ICE Exchange has a custody solution. That has been the big hurdle. How do you hold onto these assets. These are generally bear instruments, just like gold bearer bonds. That’s the big deal. They have come up with a custody solution for institutional holders.”
ICON (ICX) and 0x, which announced major partnerships and product launches this week, have also failed to see any impact from their announcements that typically result in 10 to 30 percent increase in value during a bull run or a strong rally.
The cryptocurrency market is demonstrating extreme volatility and the instability of the market has caused both major cryptocurrencies and tokens to slump throughout May.