Cryptocurrency markets are deep in the red this Monday morning following a weekend holding last week’s solid gains. A correction has been expected, but analysts fear that the downtrend could resume.
Total market capitalization has shrunk by almost 6%, or $15 billion, over the past day or so as cryptocurrencies start to pull back.
The move has dumped digital asset market cap back to just over $240 billion and crucial support areas. Further losses could result in all recent gains being wiped out.
Bitcoin prints seven green candles
From a weekend high of $9,200, Bitcoin has retreated back to the $8,600 area with a 5% slide at the time of writing. There is very little support below this price level so failure to hold here could result in a dump back to the mid-$7k zone.
Analysts are expecting a swing low into this zone which will act as a buying area.
“Does the reclaimed support at 8.3-8.4k front-run the obvious buy zone? At the MINIMUM, I expect one more sweep of the lows at 8.4k.”
The longer-term picture is still healthy for Bitcoin which has just printed its seventh green weekly candle in a row. The last time this happened was at the end of the 2018 bear market, just before prices lifted off in March 2019.
Momentum must continue to make a new higher high above the previous $10,500 top in mid-February to confirm trend reversal. Failure to do so would result in a continuation of the current trend, which has been down since late June last year.
Elsewhere on crypto markets
The market slump has affected all digital assets with altcoins getting hit harder than their big brother as usual. Ethereum has dumped back below the psychological $200 barrier with a slide of 8% on the day. Prices must hold here to prevent a larger plunge back to the $180 support zone.
Bitcoin Cash and SV are both in pain today as they also shed 7-8% each falling to $240 and $200 respectively. EOS has also taken a big 9% nosedive sliding back to $2.70 while those around it are not far behind according to Coinmarketcap.com.
With the Bitcoin halving just a week away now, all eyes will be on BTC to either lead cryptocurrency markets into a real rally or send them spiraling back into the digital abyss.