Bitcoin Records 7% Increase as Cryptocurrency Market Rebounds From Yesterday’s Losses
Originally published on: CCN
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March 31, 2018
After dipping below $6,500, the price of bitcoin has increased 7 percent to $7,100, as the rest of the cryptocurrency market recovered over the past 24 hours.
Since March 30, the valuation of the cryptocurrency market rose from $250 billion to $268 billion, by around 8 percent.
On March 29, Cornell professor Emin Gun Sirer stated that a mature market should have assets that are performing independently from each other.
“Indeed, a mature market should be decentralized, with independent coin prices decoupled from each other, each moving in concert with the future prospects of the specific coin,” said Sirer.
For many weeks throughout February and March, the entire cryptocurrency market has demonstrated correlated movements, as the vast majority of both major and minor cryptocurrencies recorded similar gain and loss patterns with extreme volatility.
Today for instance, as the bitcoin price increased by 6 percent, Ethereum, Ripple and Litecoin all increased by the same 6 percent. With the exception of a handful of cryptocurrencies, which have been likely affected by pump and dumps, most of the cryptocurrencies in the global market have all moved in a similar pattern since the major correction occurred in February.
As such, given the extreme volatility in the market and its correlated price movements, it is evident that the market has not stabilized from its recent correction, and thus may need more time to recover from its losses.
The market demonstrated a necessary rebound from the $250 billion mark, and major cryptocurrencies like bitcoin have been able to sustain their resistance levels, even though volumes still remain relatively low across all cryptocurrency exchanges.
Bitcoin’s latest correction has been brutal, and it led to millions of dollars in losses for many individuals and institutional investors holding the cryptocurrency on behalf of organizations. But, it is important to acknowledge that identical patterns have occurred in the past, throughout 2013 to 2018.
2018’s bitcoin correction is the third worst correction the cryptocurrency has ever experienced, after two 80 percent corrections it suffered in 2013 and 2014. Both corrections took nearly 12 months for bitcoin to recover from.
The market moves up and down, and volatility is stronger in markets like the cryptocurrency market that have lower liquidity and volume than other regulated markets. The cryptocurrency market was not largely affected by the prohibition of cryptocurrency ads or other news relating to regulation, contrary to the narrative the media has tried to portray. Rather, it was the market simply acknowledging that the price of most cryptocurrencies have increased to a point in which they were difficult to justify based on tangibles and sustainable models.
Tron for example, was worth $16 billion, and neared the valuation of SpaceX. While it is entirely possible for Tron to achieve that market cap again in the future, Tron has only released its testnet this week.
The valuation of most cryptocurrencies were not proportional to the impact they had on the respective industries they were targeting, and the cryptocurrency market experienced a correction because investors could no longer support the prices of them.