The current week has been bleak for the cryptocurrency markets, which slid from one key level to another in a repeat of the January and February crashes. This week crypto fell over 15% to a $250 billion market capitalization, testing lows before briefly bouncing. In the last couple of days, Bitcoin (BTC) dipped to a low of $6,600 on the Coinbase/GDAX exchange, Ethereum (ETH) fell to $365, Bitcoin Cash (BCH) dropped to $673, Litecoin (LTC) tumbled to $109, and Ripple (XRP) slipped to $0.47 on the Kraken exchange. Bitcoin dominance continues to grow, but altcoin prices have fallen to autumn 2017 levels. As bearish pressure and momentum grows and the technicals continue to point in a negative direction, investors with long positions are beginning to wonder if the fundamentals have changed.
Ethereum price is under pressure because the second largest crypto is seeing dwindling initial coin offerings (ICOs). ICO capital raised fell from $1.4 million in January and $1.2 million in February to $600,000 in March. The fatigue is partly due to heightened regulatory scrutiny, particularly from the U.S. Securities and Exchange Commission (SEC), which has reiterated that ICO companies are legally required to register ICOs as securities offerings. Thus, recent ICOs have avoided the States. Another factor could be loss of interest in ICOs compared to last year. Litecoin also announced bad news: its payment processor, Litepay, has ceased operations. Charlie Lee, Litecoin's creator, apologized for being overly optimistic about Litepay.
Crypto has also lost some search interest. Looking at Google Trends and online searches, investors can see that online search interest has sunk since December. Bitcoin still retains a trend, and Ethereum has slight local interest in Asia and Eastern Europe, but Litecoin interest is low. At the same time, interest in crypto jobs and careers has surged in the last year. Whereas much of the November and December bull run was fueled by hype and irrational exuberance, price appreciation after the correction could be slower and steadier as search interest resumes growth.
But other people are more optimistic. Some Morgan Stanley (NYSE: MS) analysts have called the 70% decline of BTC ordinary and are looking for a strong recovery. Thomas Lee's research firm Fundstrat believes that the bear market bottom is near and a big bounce is upcoming. Nvidia's (NASDAQ: NVDA) founder and chief executive Jensen Huang stated that he expects the crypto craze to continue. Finally, as the bear market has prolonged, interest in low-volatility "stable coins" has grown. Unlike the problematic Tether (USDT), a truly stable coin would be legally compliant and pegged to a fiat currency in escrow. TrueUSD and SwissRealCoin (SRC) are such stable coin concepts.
While the bears and bulls continue to battle, savvy traders and investors could look to more key technical levels in addition to fundamental news. BTC has not yet tested its February bottom of $5,873. A strong bounce from the mid-6000s might indicate seller exhaustion. ETH, BCH, LTC seem to be oversold based on the daily relative strength index (RSI). ETH appears to have strong support around $350, BCH around $650, LTC around $100, and XRP around $0.45. As long as those key levels hold in the upcoming days or weeks, a trend reversal might be in order. Otherwise, the carnage could worsen.
The author owns a small amount of BTC, ETH, and LTC.