Crypto Currency Endures Hard Correction
Monday 8th January could be said to have been a black one for several investors as crypto currency prices crashed to levels that varied from between 10 and 30%. The main loser was the innovative currency Ripple which saw its price drop by around 30% to almost the $2 level but eventually recovered to around $2.50 although it retreated again on Tuesday morning to around the $2.30 mark. This means that it is trading at almost 40% less than its all-time high of $3.50 registered just a few days ago.
The largest crypto currency Bitcoin also saw a steep drop in its value from highs of around $17,200 dropping to the mid $14,500's at one point - a fall of around 15% albeit it recovered to around $15,500 on Tuesday. That's still a drop of around 8% although there are signs of a slight recovery going on. Other major losers were Litecoin and Bitcoin Cash which saw their price drop by 9% and 7% respectively. Dash was another loser although the scale of the drop was markedly less than that in the other cryptos and only averaged around 5-6%.
The only outlier in all this was the Ethereum crypto currency which saw gains of around 5% during the drop before also falling slightly. However a huge rally was then seen in Ether which saw its price climb by no less than 11% on Tuesday morning with the currency trading at an astonishing level of $1,200 - a new all-time high for this crypto currency which has appreciated by 300% in three months. There has been no appreciable explanation for the continuous rise in this crypto currency but the fact that it is extremely innovative and flexible could be some of the reasons for its unprecedented popularity at present. Its sister currency Ethereum Classic saw a slight drop in its value to around $32 or about 4%.
This sharp correction in price obviously had a substantial effect on the market cap of the crypto currency market which declined from an all-time high of $822 billion to $700 billion in just a few hours. This represents a 15% decrease which is an immense amount for such a short space of time. However the market cap is now hovering around the $730 billion mark largely through the spike in the price of Ethereum which has now strongly retaken its position as the second largest crypto currency by market cap overtaking Ripple which has lost $50 billion in market value over the past few days.
Ripple Price Analysis
There has been an increase in selling pressure on the Ripple price below $3.00 against the US Dollar. The price failed to make an upside move above $2.80 and started a major decline. The downside move was very strong as the price dipped below the $2.50 and $2.00 support levels. It even moved below the $1.80 support and traded as low as $1.6126. Later, an upside correction was initiated and the price moved above the 50% Fib retracement level of the last decline from the $2.80 high to $1.61 low.
However, the price is facing a lot of hurdles near $2.50-2.60 and in fact it is currently stuck between the $2.20 and $2.35 mark. There is a major bearish trend line forming with resistance at $2.50 on the hourly chart of the XRP/USD pair. The trend line resistance is also around the 100 hourly simple moving average at $2.60. Moreover, there was no proper break of the 76.4% Fib retracement level of the last decline from the $2.80 high to $1.61 low. Therefore, there is a risk of more losses in the near term from $2.50. Should the price succeed in moving above $2.50, there can be more recoveries of the price towards the $2.80 level.