$18 Billion Wiped Out of Crypto in 2 Days, What’s Causing Extreme Volatility?
Story by: Joseph Young
Following Christmas and a strong corrective rally on Christmas Eve, the crypto market lost over $18 billion within a 48-hour period.
The Bitcoin price dipped below the $3,800 mark after a promising price surge to $4,300 and the Bitcoin Cash price suffered a large decline from $230 to $170 within a one-week span, losing 26 percent of its value against the U.S. dollar.
Factors Behind Wild Volatility in Crypto
Throughout the past week, investors in the cryptocurrency market have been generally positive on the short-term trend of Bitcoin and other major crypto assets, given the dominant cryptocurrency’s strong recovery to the mid-$4,000 region.
But, many analysts also cautiously suggested that the cryptocurrency market is still in a bear market and while it may be in the last phase of a year-long downtrend, a high level of volatility in a low price range is expected.
On December 21, prior to a rally that allowed the crypto market to add over $40 billion to its valuation, a cryptocurrency trader with the online alias “The Crypto Dog” said that a rally above key resistance levels in the $5,000 to $5,500 range is unlikely in the short-term despite some momentum major crypto assets showed.
The trader wrote:
Bitcoin found support near historical highs at $3,000. Earlier this week, I watched Bitcoin’s volatility and sell volume stall the further its price fell, leading me to wonder if the fabled ‘$3,000 support’ would be front ran. It was. If bulls are able to push past $4500, $4800 is the last bump in resistance that stands in the way before $5,400. At this time I am not anticipating a rally beyond $5,500, nor can I guarantee more relief even past $4,500, though we must not count any scenario out.
