In the past month, the market capitalisation of the cryptocurrency market dived over 30 per cent, from about $300 billion to, as at Saturday, $208.4 billion. And this figure could sink into deeper waters.
Market analysts have varying forecasts on how low the cryptocurrency market, once a promising and much-hyped alternative to traditional financial tools, will go. And once again Bitcoin is front and centre of it all.
FxPro, in a recent outlook post, pegs the most popular cryptocurrency - which, as of writing, closed at $6,184.71 - to decelerate to $5,800.
Bloomberg Intelligence senior commodity strategist Mike McGlone, meanwhile, gave an even gloomier forecast: a mere $4,000.
That sounds particularly unthinkable, given that it had almost touched the $20,000 mark last December 19, meaning it is now down about 68 per cent barely eight months.
In short, the technical analysis on Bitcoin - and cryptocurrencies in general - is being surrounded by bears.
The last time Bitcoin was in the $5,800 range was on June 29, when it hit a low of $5,835.75. The closest it was to the $4,000 mark without going below it, meanwhile, was almost on September 29, 2017, when it touched $4,163.07. And the last time it enjoyed a five-figure value was when it closed at $10,803.90 on March 7 this year.
"Reverting to last year's mean of about $4,000 appears likely, getting this year's decline close to 80 per cent, a worthy reciprocal of 2017's buying frenzy," McGlone wrote.
There is, however, optimism that remains in the market, albeit in a very toned-down manner.
"Although analysts remain bullish on Bitcoin perspectives, currently they warn us to be cautious," the FxPro post said.
Part of Bitcoin's recent plunge was due to the US Securities and Exchange Commission announcing on August 8 that it was postponing its decision to give the green light to a Bitcoin exchange-traded fund (ETF). That move alone wiped off $9 billion off the cryptocurrency's value.
Even some market players are resigned to the fact that this is indeed a tough sell - though seemingly limited in the short to medium term.
"The market overreacted to a slew of applications to the SEC that had no chance of getting a quick acceptance and are now overreacting to the highly expected outcome," said Hany Rashwan, chief executive officer of crypto startup Amun Technologies.
"The SEC is likely to delay until February of 2019 and the chances of a Bitcoin ETF approval in 2018 have always been low."
Winning approval would have been a victory for cryptocurrency advocates; it would have been vindication for those who have long sought widespread acceptance for their product, which has faced numerous adversities, from negative Press to scepticism and market volatility to cyber-attacks.
Bitcoin's peers haven't performed any better.
To date, nine of the top 10 cryptocurrencies are down in the past seven days by an average of 18.2 per cent, according to CoinMarketCap. Only two of them are up in the top 50, while six rose in the top 100. Only the top four - Bitcoin, Ethereum, XRP and Bitcoin Cash - have a market cap of at least $10 billion, with Bitcoin enjoying a $110.7 billion value, which is almost half of the entire market.
Crypto No.2 Ethereum is down almost 57 per cent this year, from $772.64 on January 1 to $334.18 on Saturday. Ripple has plunged 86.6 per cent from $2.39 to $0.32, while Bitcoin Cash, a spin-off of its namesake, is down 76.5 per cent from $2,432.54 to $572.44.
Omar Godbole, market reporter at CoinDesk, on August 10 argued that the closing price of Bitcoin for that day would be "pivotal".
It "will likely decide the short-term trend in prices," he wrote.
"The leading cryptocurrency snapped a three-day losing streak on Thursday as the 26 per cent sell-off witnessed in the last three weeks was looking overstretched," he wrote.
"What's more important is that Bitcoin traded [on Thursday] within the high and low range of the previous day, indicating the bears have likely run out of steam and the bulls are still reluctant to enter the market at these levels."
Analysts see the $6,000 barrier as critical for Bitcoin to calm nerves. Robert Sluymer, managing director and technical strategist at Fundstrat Global Advisors, says that despite while the cryptocurrency rebounded from a 10 per cent drop on Wednesday and selling has eased, there's still no guarantee that it's on safe territory.
"At the risk of stating the obvious, the crypto technical backdrop continues to deteriorate despite news flow that many investors would argue is incrementally improving," he told MarketWatch.
Conversely, Sluymer's colleague at Fundstrat, Tom Lee, is pushing his case as one of the biggest bulls in the crypto market: he is still holding on to hopes of a 2018 rally and his price target of $25,000 - a 280 per cent leap over the next five months and well beyond the record Bitcoin set in December.
Sluymer, however, is quite firm with his views.
"While we appreciate the contrarian sentiment above, beyond short-term trades, we don't believe the technical decay has reached the types of extremes yet to support a major contrarian call," he pointed out.
And, as the piece added, should Bitcoin is indeed able to achieve a turnaround, gains are expected to be limited - if and when that time comes.
All values as at posting time.
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