It has been a large, broad-based drop across all the cryptocurrencies as we believe that the market is undergoing an important stage in its maturing process. Every market goes through such a process for a variety of reasons and it is the same in this market as well. Due to the specific nature of different markets, there are no set rules on how the maturity happens and why it happens as well. That is why trading in such new undeveloped and unregulated markets is not for the faint hearted.
Both BTC and ETH Crash on Dumping
We saw the bitcoin prices crash below $2000 and the ethereum prices crash below $140 over the weekend in a broad based correction. Though the ethereum prices have since recovered to come back towards the $160, the bitcoin prices continue to trade below $2000 as of this writing.
There has been a variety of reasons attributed to the fall. It includes the enw software upgrade in bitcoin which is due to release on August 1 and this has unnerved some of the investors who want to sell off as they are uncertain about the consequences of this upgrade. Some point towards the rumors of a split in bitcoin. Some also point to general profit taking and correction after bitcoin and ethereum have risen so much over the last few months. Then there are the ICOs where various crypto based startups collect funds in ethereum and with several million collected by them over the last few weeks, they need to convert some part of them into USD and hence they are probably dumping them into the market.
To us, we believe the last reason, that of ICOs dumping their crytos seem to be the most plausible and we believe that this is all part of the maturing process. It remains to be seen how the prices cope with all this volatility and how they begin to stabilise but what this fall will do is that it will shake off all speculators in this market who are in this purely for the short term gains and will ensure that only long term investors stay behind, which is good for any market.
Looking ahead for the day, we expect the $170 price region to act as a strong resistance for the further upmove for ethereum and we expect the prices to continue to trade in a weak manner. We expect the $2000 round figure to play a similar role as far as bitcoin prices are concerned and retail traders would be advised to stay well away from these markets for now and wait for all the dust to settle down.