Cryptocurrency Sector Resumes Its Historic Bear Market
Twelve days ago, we noted that the Cryptocurrency Sector was poised to resume its severe 2018 Bear Market (http://markonomics101.com/2018/06/12/cryptocurrencies-poised-to-resume-bear-market/). That forecast, as of this morning’s trading, looks to have been correct.
The Cryptocurrency Sector has make new lows for 2018, breaking below the $250 Billion support zone that held prices in early April. According to CoinMarketCap (https://coinmarketcap.com/) which tracks more than 1600 individual issue, the Total Market Capitalization had plunged to $240 Billion as of early Sunday morning, which is the lowest level of the year and a full $10 Billion below the level that held prices on several occasions. The Support line is marked in red.
Five of the largest and most actively traded issues demonstrate again how this sector moves completely in unison. Charts for Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC) and Bitcoin Cash (BCH) show that 4 of the 5 have broken support and are now in BEARISH patterns, with only ETH still trading above previous support levels.
The Cryptocurrency Sector peaked on January 6th, 2018 at a staggering total value of $826 Billion then plunged a jaw dropping 65% to $282 Billion within the 30 trading days ending February 5th. While the equity markets were teetering on the edge of a possible crash in early April, the Cryptocurrency Sector held tough at about $250 Billion, and managed a weak rally over the next several weeks. Reaching a BEAR MARKET rally peak of $470 Billion on May 5th, it has been sliding ever since.
With today’s trading, Cryptocurrencies have already lost another 50% from that short term highs reached in early May. The next area of support would be at roughly the $160 Billion level, which held prices back in November, 2017. A move down to this level would mean yet another drop of 33%. If the Cryptocurrency Sector traded down to $160 Billion, the loss would be 80% from peak to trough in less than a year’s time.
Whether the Cryptocurrency Sector holds there or above or below is not predicable with any type of accuracy. However, it must at LEAST hold that $160 Billion level to even remain relevant. Bitcoin continues to represent roughly 40% of the entire sector and its ultimate value continues to be questionable.
In a special report, called “Bitcoin or Bustcoin”, (http://markonomics101.com/2017/12/21/bitcoin-or-bustcoin/) published late last year, we discussed the many reasons that BTC had FATAL risk factors and that the valuation was completely unsupportable.
One can argue, that if Bitcoin is indeed valueless, then so is the entire Sector or of no more than nominal value, such as old Chinese War Bonds. This is NOT to say that Cryptocurrencies will ultimately have no societal use. But, the VALUE question is SEPARATE from the USE question. It is entirely possible that, like Bus Tokens, they have use but NO VALUE.
How better to fool the MOST number of people than to make detractors wrong and proponents wrong at the same time?