After a turbulent and highly volatile Wednesday, Thursday was slightly more calm in the crypto currency markets with a major price correction taking place. The major cryptos such as Bitcoin, Ethereum and Litecoin all experienced drops of over 20% before resettling at respectable levels. Bitcoin Cash also posted a steep decline Thursday showing that the currency tends to move alongside the main Bitcoin although this has not always been the case. The stream of negative news from various sectors of the market also had a bearish impact on the price of other crypto currencies such as Ethereum Classic declined substantially. The only positive movement was in Dash which kept climbing to record highs of almost $800 at one point.
Bitcoin Cash declined to the $1,200 region for the first time since November 12, while the price of Ether has dropped below $400 after surging to nearly $500 in the past week. The price of Litecoin decreased from $103 to $79, demonstrating a 23 percent decline within a 12-hour span.
No Major Movements, Normal Price Correction
In July, when the majority of investors within the cryptocurrency market panicked over bitcoin’s abrupt price drop, bitcoin and security expert Andreas Antonopoulos stated:
“The reason bitcoin price is dropping is the rapid 1500% rise in 2 years, especially the last 3 months. The ‘scaling debate’ is just a trigger. Relax.”
Similarly, most cryptocurrencies in the market including bitcoin, Ethereum, Bitcoin Cash, and Litecoin have demonstrated exponential increase over the past few months, without major corrections. The bitcoin price surged to $11,300 from $6,000 in November alone, while the price of Ether surpassed the $400 mark for the first time since September.
The price of leading cryptocurrencies has exploded and surged rapidly within a one-month span, with nary a correction or sharp decline in value.
Earlier today, several news publications attempted to justify the price drop of cryptocurrencies such as bitcoin. One large-scale news publication claimed that the price of bitcoin dropped because of the lack of endorsement from a European central bank chief. Evidently, there exists no possibility it played a vital role in the price trend of bitcoin, primarily because the European cryptocurrency exchange market accounts for only a fraction of the global bitcoin exchange market.
It is simply unrealistic and illogical to conclude that a market with around 5 percent market share led the bitcoin price, dominated by the US, Japan, and South Korea, to drop by 14 percent.
When Will Cryptocurrencies Rebound?
As highly respected financial analyst, investor, and RT host Max Keiser stated, the price of most leading cryptocurrencies including bitcoin have followed the trend demonstrated below.
Cryptocurrencies tend to achieve a new all-time high, endures a major correction, then peaks to a new all-time high, and stabilizes in the previous all-time high.
It is positive that the cryptocurrency market endured a major correction which only resulted in a 20 percent decline across most cryptocurrencies. Several analysts including Willy Woo of WooBull noted that the drop or the correction could have been much larger, given the exponential growth of leading cryptocurrencies like Ethereum, Bitcoin Cash, bitcoin, and Litecoin over the past few months.
Major price corrections allow the market to stabilize and prepare for stronger rallies in the mid-term. It would be considered worrying if cryptocurrencies continue to increase rapidly in value without corrections on several occasions. Price corrections enable cryptocurrencies to establish healthier uptrends and the market to become more stable in the short to mid-term.
Ethereum Price Upside Hurdles
There was continuous pressure on ETH price as it remained below the $458 resistance against the US Dollar. The price started a recovery from the $390 swing low and moved above $420. It even moved above the 50% Fib retracement level of the last drop from the $455.99 high to $390.74 low. However, the price is facing many hurdles on the upside near $430 and $458.
The current recovery was capped by the 76.4% Fib retracement level of the last drop from the $455.99 high to $390.74 low. There is also a short-term bearish trend line forming with resistance near $430 on the hourly chart of ETH/USD. If the pair succeeds in breaking the trend line resistance at $430, it might challenge $455-458. The stated $458 level is very important as a resistance. It acted as a support earlier and now it might prevent gains above $460. Moreover, the 100 hourly simple moving average is near $455 to prevent buyers from taking control.
It looks like the price might trade in a range below $455 for some time before it makes an upside move. On the downside, a couple of important supports are at $410 and $400 followed the recent low at $390.
Hourly MACD – The MACD has reduced most of its bearish slope.
Hourly RSI – The RSI is currently just around the 50 level and has reduced most bearish signs.
Major Support Level – $420
Major Resistance Level – $455