The past seven days have been tumultuous in the world of cryptocurrencies, with Bitcoin (BTC) users and investors holding their breath as BTC remains stalled around the $26K mark. But while many have held on to their BTC, some of the higher profile altcoins have seen notable drops in prices. In this article, we take a look at the major alts that have seen the most drastic losses over the past week, and explore what the market trends may tell us about the current state of the cryptocurrency sector.
1. Weekend Watch: Stalled Bitcoin Prices and Major Altcoin Dumps
The last weekend’s performance in the cryptocurrency market was anything but spectacular. Bitcoin prices retreated from the previous week’s peak and the top-10 altcoins saw huge dumps.
Despite the strong sentiment of 2020, Bitcoin prices remained relatively flat for the entire weekend. The cryptocurrency started the weekend with a stable price point and ended the weekend at the same rate. The chart below shows that Bitcoin peaked at $9,415 on December 18th and remained at the same level for the subsequent two days.
Next, the top-10 altcoins performed badly throughout the weekend, dumping sharply after beginning the week strongly. Ethereum, Bitcoin Cash, XRP, Binance Coin, and Litecoin all saw losses of between 5% to 10%, while ChainLink lost 15% of its value. Additionally, Stellar dropped by 25% and Cardano dropped near 30%. Cryptocurrency analysts described the losses as “alarming” but failed to identify any specific catalyst that caused the downturn.
The market’s current sentiment remains uncertain, as there were both positive and negative news stories last weekend that could have had an effect on trading. On the positive end, Hong Kong-based crypto exchange Bitfinex announced that it was listing XRP after it was delisted by Coinbase. However, on the negative end, a report revealed that exchange-traded products (ETPs) based on Bitcoin decreased significantly in November after seeing a peak earlier in the year.
2. BTC at $26K: Where Are Alts Headed?
As Bitcoin hovers around the $26K mark, many traders are wondering where the rest of the cryptocurrency market is headed. Altcoins have followed Bitcoin’s lead with relative stability; however, some analysts believe the sector could be in for more dramatic price hikes heading into the next year.
The most bullish proponents, such as Anthony Pompliano, predict cryptocurrencies could reach aggregate capitalizations of over $5T by the end of 2021. Some on the bearish side, including conservative economist Nouriel Roubini, point to the extreme volatility of the crypto market as a deterrent to long-term institutional investing.
The debate over altcoins remains an ongoing process. Undoubtedly, the high-profile nature of Bitcoin’s rise to prominence has skewed the mainstream narrative somewhat. Still, there are several compelling reasons to consider investing in alternative cryptocurrencies:
- Potential: Despite the gains made by Bitcoin, the sector still has a lot of room to grow.
- Diversification: For many investors, spreading their wealth across multiple coins can reduce risk.
- Innovation: New projects with innovative technology could yield big returns.
- Adoption: Some altcoins have grown in popularity and are more accessible to everyday users.
At the end of the day, the decision of which coins to hold is up to the individual investor. It may prove wise to focus on projects that possess the most innovative technology or those with the most upside potential. Interested parties would be best advised to read up on the history and features of a given cryptocurrency before investing their funds.
3. Analyzing the Biggest Losers of the Week
The week has come to an end and we’ve seen some stocks take a deep dive into the market, but which ones have had the worst performance? We’ll take you through the biggest losers of the week and analyze the events which saw them decline in value.
Oil Industry – The past week has seen several large oil companies struggle on the market as prices fall and pressure increases. Companies such as BP and Shell were among those hit hardest, dropping more than 10% in the last five days. The newly appointed US administration has promised to increase domestic production, which is seen as a clear obstacle to the industry’s growth.
Technology Sector – While there are some giants that managed to remain relatively unharmed by the week, there have been some glaring weaknesses within the sector. Apple has lost 10.4%, Twitter has decline by 9.3% and Microsoft has distributed 9.1%. These plunges could be attributed to the recent negative news stories regarding Apple, as well as several other tech companies in the sector.
Retail & E-commerce – The highly competitive e-commerce market has been struggling in recent weeks. Amazon, which leads the market, has seen an 8.2% drop in the last five days, while big names such as eBay, Urban Outfitters and Target have all experienced notable losses. As consumer habits change and new technology is introduced, the e-commerce industry could be seeing the start of a worrying trend.
4. How Traders Should Respond to the Market’s Volatility
The market is in a state of instability, and traders need to take steps to protect their portfolios from the volatility. Fortunately, there are several strategies traders can employ to ensure that their capital is safeguarded and they stay in the game.
Understand the Cause of Market Volatility: It’s important for traders to understand why markets become volatile. It could be the result of a geopolitical event, economic news, or even an unpopular decision made by a company’s executive team. By understanding the cause, traders can develop strategies to mitigate their risk and capitalize on opportunities.
Focus on Long-term Strategies: Traders should focus on long-term investment strategies to reduce their short-term risk. For example, traders might adjust their portfolios to include more defensive and stable investments to help weather any market storms. They may also diversify their portfolios to spread out their risk.
Create an Exit Plan: Traders should create an exit plan for their investments to mitigate losses in the event of market volatility. They should consider their entry and exit points and have predetermined plans for reducing their exposure in bad market environments. This can help them protect their profits and mitigate losses.
- Understand the Cause of Market Volatility
- Focus on Long-term Strategies
- Create an Exit Plan
Traders need to stay agile and proactive to take advantage of changes in the markets. By creating a plan to respond to market volatility and understanding the causes of fluctuation, traders can safeguard their portfolios and maintain their investments over the long-term.
The market heats up as it tries to break through the key $30K level. With different altcoins dumping hard, some experts suggest that BTC still has plenty of room to grow, while others believe the market has become overbought. Whatever the case may be, investors should always do their due diligence before making any investment decisions. Staying up to date with market momentum and movement will ensure you don’t miss any important developments and take advantage of any buying opportunities that arise.