Crypto markets took a sudden turn for the worse during their first weekend of trading in 2015.
And this one is pretty bad. Even Bitcoin 2.0 currencies like Ripple’s XRP, Nxt and Stellar, which have often shown resilience during harsh downturns, have not escaped the carnage.
Bitcoin (BTC/USD) suddenly dropped by as much as 13% during the past 24 hours. It hit a new 14-month low of $272 on BTC-e minutes ago, earlier breaking $300 for the first time since early October. The extent of the losses, particularly among altcoins, has also evoked memories of the August sell-off. BTC is now trading at $281.
Litecoin fell by as much as 24% to $2.02, also a 14-month low, now hovering near $2.12 in unsettled trade. The LTC/BTC rate is thus 0.0075, earlier hitting 0.0069. All of the top 30 cryptocurrencies, as ranked by market cap, are in the red, many by double digits.
Paycoin has been hit very hard, losing another 22% during the past 24 hours. It has lost as much as 83% during the past 5 days, shedding over $100 million on market cap in the process.
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One bright spot has been Dogecoin. It has traded flat relative to bitcoin for over a week, adhering tightly to within 3% of the 58 satoshi mark. However, its dollar-based value has suffered as a result of bitcoin’s decline.
At a high level, the downturn seems to have come totally unexpected. Bitcoin was trading in a stable range of $310-$315, although unusually flat trade in the past has been a precursor to big moves in either direction.
It’s likely that BTC’s initial break to the downside, when it first pierced the $300 mark, set off a chain reaction. As previously assessed, any break of the $300 mark would likely trigger the activation of stop orders set around the psychologically important level. It is believed that the heavy selling in early October was from early adopters setting such orders to preserve gains.
This time around, even though BTC bounced back above $305 following its first break, the wheels were already set in motion. Interestingly, the initial move past six-week lows into the low $300’s did not take place on particularly high volume – no more than 500 BTc/hour. But the volume levels were still a sharp uptick over what had been typical low-weekend activity of 100-200 BTC. Once the selling reached its climax, nearly 2,000 were changing hands per hour.
Prices on Bitstamp and BTC-e are roughly equal, a deviation from their tendency to diverge during market downturns, though deviations in the other direction have become increasingly common.