The crypto correction that everyone has been waiting for has
finally kicked in today. Markets are a sea of red and Bitcoin tumbles ten
percent and altcoins get hammered. The move is not entirely bearish however and
will present new support zones and entry levels for traders and investors.
What Goes Up Must Come Down
Bitcoin and crypto markets have been on fire in May. Since
the beginning of the month markets have surged
over 50 percent to reach a ten month high of $264 billion. This epic rally
has been largely driven by Bitcoin which has dominated markets as it surged
above $8,000 when most expected it to stop at $6,000.
With such rapid gains come equally violent dumps as day
traders take profits and sell orders are triggered. This is exactly what has
just happened to Bitcoin a few hours ago. During early Asian trading BTC dumped
from just below $8,000 down to $7,175 according to Coinmarketcap.com. The
ten percent slide has pulled the entire market down with it as total capitalization
shrunk by $30 billion.
As expected the altcoins have been hammered even harder with
many dropping double figures. Following a couple of days of solid gains, XRP,
Stellar and Cardano have dumped around 14 percent each today. Bitcoin Cash,
Litecoin, EOS and Binance Coin are not faring much better as the all lose over
9 percent on the day.
Total market capitalization dropped from its 2019 high of
$264 billion to around $230 billion as the exodus accelerated.
A number of industry observers are still bullish though and
see this correction as a healthy part of market cycles. Many are looking for
new buying opportunities at BTC support levels. Analyst fil₿fil₿ said;
“Would like a bounce at $6.4k but i fully expect a 61.8% retracement from top which may present the last great buying op. @ c.$5.2k”
$6,400 was the most traded price of 2018 so a major
correction could find support at this level. Moving averages have traditionally
served as levels of support and resistance and the 50 day one sits at $5,500 at
the moment. On the lower side the 200 day MA is at $4,400 but a drop to here
would be extreme.
At the time of writing Bitcoin had already started to
recover from its intraday dip and was trading at $7,300. Further losses are
expected though as Europe and America wakes up to a red Friday in crypto land.