On July 10-11 after coasting along for over 72-hours above the US$2530 range the price of bitcoin took a significant dive to $2240. Bitcoin markets have rebounded slightly on July 12 and the price per BTC is now hovering around $2370 at the time of writing. Further many altcoin markets have seen bigger percentage drops as the entire cryptocurrency market capitalization has lost billions.
Cryptocurrency Market Capitalizations See a Significant Decline in Value
Digital currency markets have seen better days as nearly every cryptocurrency saw a bearish decline in value over the past two weeks. At the moment bitcoin’s price is staying above $2300 but some traders believe we could go under $2K soon, due to the next few months scaling uncertainty and a possible chain split. Alongside bitcoin’s drop in value, many altcoin markets suffered from significantly deeper corrections. The one-week bitcoin price average shows a loss of 8 percent, meanwhile, a vast amount of altcoins saw 10-50 percent losses. For instance, the second largest cryptocurrency market ethereum has declined roughly 27 percent over the course of the week and hit a low of $190 per ETH. However, ethereum markets have since rebounded as well on Wednesday roughly 15 percent to $225 ETH/USD.
‘Bitcoin Uncertainty Brings Doom and Gloom to the Whole Ecosystem’
This week Bitcoin.com spoke with Charles Hayter founder, and CEO of the cryptocurrency data analysis firm Crypto Compare about his thoughts on the current cryptocurrency markets’ decline. Hayter says there’s a lot going on right now in crypto-land with the recent ethereum ICO gold rush and possible bitcoin scaling events (UASF, Segwit2x) taking place this summer.
“A bear market has been in effect and certainly sentiment has switched away from the irrational exuberance that was leading people to buy ethereum and then rush into various ICO’s,” Hayter tells Bitcoin.com. “Some of the heat is coming out of recent rises – the feedback loop between the fiat on ramps to bitcoin and ethereum then on into ICO’s is seeing less volume so the supply and demand balance is out of kilter.”
Altcoin markets have been the ones with a higher risk-reward ratio so operate on a higher beta than bitcoin — when the markets move the altcoins will move with more vigor in the direction of the trend. A rising tide lifts all boats but the opposite is also true. Although ethereum has had huge rises and is challenging bitcoin’s supremacy – bitcoin is still the gold standard of the crypto space and uncertainty surrounding its charted path brings doom and gloom to the whole ecosystem.
A Bitcoin Split Could Cast a Shadow on Cryptos in General
Hayter says it’s hard to call the bottom right now for markets like ethereum and bitcoin. “One can look at technical levels for psychological reasons but these are momentary impulses in the market. Predicting when the market will turn with sentiment and for demand to become dominant is a shell game but you will start to see it in volume and general market chatter.”
We also discussed Hayter’s predictions if the bitcoin blockchain splits and the possible outcome of a Segwit implementation. “A chain split will create uncertainty — the only historic precedent is ethereum and ethereum classic — it’s possible to envision both scenarios of a loss or total gain in value.
However, the uncertainty created across exchanges and wallets with the resultant main media fallout will certainly give a more negative taste to the whole experience and cast a shadow on cryptos in general.
Hayter believes a Segwit implementation could have a positive effect on markets by moving past the scaling issue temporarily. The Crypto Compare founder says,“Segwit does open up new opportunities for bitcoin and to have it implemented opens up options for development — to put the scaling issue to bed to a large degree will be positive as in the long term it re-unifies the bitcoin community.”
“Instead of wasting firepower fighting for respective vested interests and ideals – energy can be invested in building the future,” Hayter concludes.
What do you think is in store for bitcoin and the future of cryptocurrencies? Do you envision prices reaching all-time highs again? Let us know what you think in the comments below.
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