The price of bitcoin has fallen below $9,200, by more than 9 percent, as the cryptocurrency market experienced yet another major correction.
Most cryptocurencies in the market fell by more than 15 percent, as major cryptocurrencies like Ripple, Cardano, Bitcoin Cash, and Stellar have fallen in the range of 12 percent to 16 percent. Analysts have demonstrated their concerns towards Ripple specifically, as it fell below the $1 mark for the second time in two weeks.
Similar to how the $10,000 mark is a psychological threshold for most bitcoin investors, the $1 mark represents a similar threshold for Ripple or XRP investors. While the price of Ripple has rebounded after dropping below $1, it is important to acknowledge that the price of XRP has fallen below $1 twice within the past 2 weeks.
Other cryptocurrencies have also struggled to show any signs of short-term recovery. Bitcoin Cash and Cardano have remained stagnant for weeks, maintaining their positions as the fourth and fifth most valuable cryptocurrencies in the market. While the two cryptocurrencies have fallen significantly in the past week, other cryptocurrencies have moved in a similar trend.
On a monthly basis, the entire cryptocurrency market has declined by $120 billion, from $590 to $470 billion. Usually, even after major corrections, the market tend to record gains in the mid-term, often on a monthly basis or a quarterly basis. The past month has been a slump for the cryptocurrency market and based on the daily trading volume, overall interest, and momentum indicators, it seems unlikely that the cryptocurrency market will increase by a large margin in the short-term.
In summation, while it is a viable time for newcomers to enter the cryptocurrency market, it is not particularly the best period to invest in the market. If the market shows some signs of recovery in the short-term, then it would be an option to invest but at this moment, it is most important to diversify assets and minimize risk.
What Triggered the Slump?
The cryptocurrency market was hit with a series of negative news and developments. Some regions are still recovering from trading ban FUD initiated by the South Korean government and most recently, the Indian government.
Also, the cryptocurrency market was mostly composed of speculators and casula investors eyeing short-term profits. As the price of most cryptocurrencies declined, speculators left the market. This could be evaluated as a positive long-term development as the market can shake off weak hands and strengthen. But, in the short-term, it could lead to major losses for existing investors.
Many investors have become concerned with taxation policies of certain regions and markets, the state of regulations in countries like India, and the long-term growth trend of the cryptocurrency market.
The cryptocurrency market is down by around 40 percent from its all-time high. Fundamentally, when any market falls by more than 40 percent, it presents strong buy opportunities for outsiders. The cryptocurrency market could recover as a new wave of buyers enter the space but until then, the market could struggle to recover.