By Maria Fox
April 10th, 2018 at 18:00 UTC
On Monday April, 9, multiple news agencies announced that the cryptocurrency market dropped $20 billion in one day. This brought cryptocurrency market capitalization to $256 billion and Bitcoin immediately fell $500 to trade at $6,758. Ethereum lost about 8%, falling below the psychologically important mark of $400.
The majority of altcoins followed the crypto-market headliners and only NEO, Verge, VeChain, Bytom and Skycoin held in the green zone, with some slightly increasing price. In general, the negative trend in the cryptocurrency market continues from late December 2017 when the total capitalization of digital money was equal to $830 billion.
The situation outlined above presents a market dominated by panic and fear but taking a step back to view the larger picture allows one to see the true situation of the cryptocurrency market. The cryptocurrency market experienced an equally terrifying “Black Monday” correction on July 10, 2017 when the market contracted dropping $20 billion in value. It wasn’t long after that this fall was followed by an enchanting rise.
In the summer of 2017, the market retreated and the Bitcoin price was $2,613, Ethereum $200 and the total market capitalization of cryptocurrencies reached $82 billion. 10 months later, having taken several trips on the market roller coaster, Bitcoin and Ethereum holders still held on to substantial profits.
Last year, Goldman Sachs analysts explained the situation on the market called it a wave of correction according to the Elliott wave principle. Although the experts claimed that the trigger for the market correction was information about a series of government bans on ICOs in China where at the time nearly an eighth of ICOs started.
In July 2017, Goldman Sachs forecasted that under the most optimistic scenario Bitcoin price would reach a maximum of $3915 by the end of the year. Roughly 4 months later (December 17, 2017), CoinMarketCap showed Bitcoin trading at $20,042, leaving the “optimists” alone with their predictions. At the same time investors were further inspired by the promise of additional prices increases from the CME Group trading of BTC futures. So the potential of the leading digital currencies is still far from being exhausted.
In 2018, the role of head cryptocurrency oracle has been bestowed upon Wall Street investment analyst and co-founder of Fundstrat Global Advisors, Tom Lee. Since early 2018, Mr. Lee has accurately predicted BTC price action. In January he forecasted a rate of $25,000, March, a drop to $ 5,873 and in April he believes BTC will experience an increase after the 17th of April when cryptocurrency exchanges and traders will pay capital gains taxes in the United States.
Tom Lee’s last statement deserves special attention. Most of the working assets of exchanges are concentrated in Bitcoin and Ethereum and having creamed money off the top of the digital currency market in 2017, traders are now forced to pay taxes and some are funding these expenses by selling their cryptocurrency holdings. This creates a strong, albeit temporary, pressure on the Bitcoin and Ethereum price.
Let’s hope that Tuesday, April 17th, will be the day when the negative trend in the crypto-market will turn back, as it has done many times before, and Tom Lee will be right once again.