Bitcoin, Ripple and Litecoin sell-off: is it different this time around?
Bitcoin, Ripple, Litecoin and other cryptocurrencies are selling off again. It’s the fifth time this year, in case someone is counting.
There are a couple of things different this time around. One of them is that the sell-off began after a period of two-month stability rather than after a short spike. That's especially the case for Bitcoin, which has traded close to $6,500 since early September, before plunging below $5,500.
Another thing is that the sell-off broke though the $6,000 and the $5,800-marks, which has been seen a market "bottom" for the digital currency.
That's a bearish sign for some.
"For me, $5,800 is a more important level than $6,000 as this is the real bottom Bitcoin last hit," says Clement Thibault, Senior Analyst at global financial platform Investing.com. "We're already seeing Bitcoin go back up to $6,000, and I'll believe a full bearish swing when I see it. We haven't had one of these since Bitcoin began trading between $6,000 and $7,000."
Cryptocurrency trader Abraham Merkin is concerned about the spike in trading volume accompanying the sell-off. "After months of low volume and low market interest this has all the markings of a triggered panic sell. Volume is up as high as 85% on some exchanges and 20-25% is common even among mainstream exchanges."
Henry James, deputy CEO and chairman at Fincross International, isn't surprised by the sell-off. "This comes after a long period of tightening price action amongst Bitcoin, Ether and other cryptocurrencies and a breakout from this price range has been expected for a number of days, so the sudden volatility has not come as a surprise. This latest sell off suggests that buyers are still hesitant at this stage and are in search of more real-world use cases for cryptocurrency."
While different with previous sell-offs, the current sell-off has similarities to the sell-off of last January. It's very broad. In the last seven days, Bitcoin is down 12.10%, Ripple is down 15.94%, and Litecoin is down 18.32%.
And it has been extending across the entire cryptocurrency list, with 93 out of the top 100 cryptocurrencies losing ground.
This means that money getting out of major cryptocurrencies isn't being invested back into other cryptocurrencies. It is leaving the entire asset class.
That's what happened back in January. We all know what happened to cryptocurrencies after that.