The crypto market has lost more than $9 billion of its worth in less than three hours, as a result of significant decline i. the price of tokens and small market cap cryptocurrencies.
Tokens Plunge 10% Off of 2% Decline of Bitcoin
Following the demonstration of a relatively strong corrective rally, decrease in the crypto market’s tokens valuation was recorded, which accounted 30 to 50 percent rise against the US dollar for the last 48 hours.
Nano, Zilliqa, and Aelf, which were the best performers against both the Bitcoin and US dollar on August 17, decreased by 18 percent, 13 percent, and 12.9 percent respectively, hence, turning to the worst performers on August 18.
The fall in the price of tokens in the last three hours was attributed to the overly strong recovery of the cryptocurrency market by some analyst, which was believed to have been stimulated as the crypto market got to oversold conditions.
Alex Kruger, who is a respected cryptocurrency trader and FX market maker trading analyst currently stated:
BTC was rejected at $6,600 and the whole crypto complex fell like a house of cards (-10%/20% this morning). A strong bounce out of massively oversold levels does not indicate a new bull run has started.
In a nutshell, Kruger stressed that the many of traders in the cryptocurrency sector misinterpreted a minor corrective rally created by strong oversold situations in the crypto market for a bull rally, and waited for the market to do better than its projected recovery in the first place.
The moment the investors began to appreciate the minor corrective rally as a proper rally, the traders in response, aggressively pursued high-risk high-return trades in tokens, thereby moving the price of certain tokens such as VeChain and Ontology by 30 to 50 percent.
The price of VeChain at one point on August 18, raised by nearly 90 percent against the US dollar within 24-hours.
Next, to an important correction, which is similar to the fall from $8,500 to $5,800 witnessed by Bitcoin in early August, a steady comeback is important for the market so as to search momentum with which a strong mid-term rally can be supported.
In the few days that have past, investors reacted too intensely to a minor recovery that was created after crossing the $6,000 support level by strongly pushing high-risk trades.
In subsequent days, it is possible that Bitcoin’s loss will be reduced at around the $6,400 region and tokens discover their momentum but the predicted drop in the price of tokens on August 18 notified investors that participated in the market with unjustified expectations after a long fall.
Presently, the Bitcoin and Ethereum’s volume is at July levels, thereby, not suggesting that a strong rally is in play in the short-term. In the past 12 hours, tether’s volume has increased from below $2.8 billion to $3.5 billion, signaling that, in order to avoid short-term losses, investors are hedging the value of cryptocurrencies to the value of the US dollar.