Yesterday, it seemed that things were getting back to normal as it looked like Bitcoin’s price recovered after the $500 crash which brought it from a high of $2980 to a low of $2480. However, in recent news Bitcoin’s price crashed yet another 16% to a new low of $2297. Moreover, the rest of the cryptocurrencies aren’t looking too bright either, Ethereum for example tanked over 23% to a low of $310.
As discussed in our technical analysis article written yesterday, many speculators on Tradingview were predicting a Bitcoin crash. Most traders put the short target right around the $2400 level, it seems that they weren’t far off as Bitcoin is currently looking for support at the $2300 line.
Many will argue that the recent market action is a necessary correction and that in the long term, the cryptocurrency will continue its positive trend. While that may be true, in the short term Bitcoin may see some turbulence.
It’s all thanks to Bitmain. As their latest blog post suggests, on August 1st, if UASF activates, the mining giant will hard fork Bitcoin into their own version. Ultimately, if they get their way we might just see three Bitcoins on August 1st – one soft forked, one hard forked, and one with neither. This by no means is a positive development for Bitcoin speculators, and explains the main reason for the latest price dump.
Another factor which might contribute to Bitcoin’s recent crash, is congress’ new bill titled “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.” As the name suggests, this new bill basically says that cash is evil, crypto is evil, prepaid phones are evil, and gift cards are evil. If this bill comes to pass, expect crypto’s market to suffer significantly as the government would take quite a harsh stance on Bitcoin.
In more relevant news, taking a look at the top 10 cryptocurrencies based on market cap, all we can see is blood everywhere. Each and every single cryptocurrency has dropped in value in response to Bitcoin’s price crash. While some held their value better than Bitcoin, there is no denying that BTC is still setting the trend in crypto markets.
Chart: Coinmarketcap
What is also surprising, is how Ethereum’s price once again converged to that of Bitcoin. After the meteoric price rise a few weeks ago, Ethereum’s price seemingly diverged from Bitcoin. However, in the past few days it seems that ether’s price returned to following Bitcoin’s. It is possible that Bitcoin is once again asserting its dominance, because when the red candles hit, investors are more confident in holding the granddaddy of all cryptocurrencies, rather than the teenager prodigy that is Ethereum. Not saying Ethereum doesn’t have potential for new heights, but there is absolutely no reason why Bitmain’s debacle should be affecting Ethereum price.
It may be that the ICO trend for Ethereum is slowing down and the bubble may pop. After all, there are dozens of ICOs coming out on the Ethereum blockchain every week and all are looking to make a profit. Investors might not get as excited about these projects because many already made profit off of Ethereum and would rather cash out, while others remain skeptical of unknown ICOs.
Moreover, Ethereum’s market cap came very close to that of Bitcoin. If Ethereum would’ve hit $500 and surpassed Bitcoin’s market cap, that would’ve been a historic moment since it would mark the first time ever that another cryptocurrency surpassed Bitcoin. However, with the block size debate heating up Ethereum may not need to rise to new heights in order to match Bitcoin, on the other hand it simply needs to hold its value. If that happens, we might see ether’s price once again diverge from it’s counterpart and possibly set new heights.
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