Cryptocurrency prices start to stabilise, but recovery is elusive
An apparent turnaround on the weekend stanched the bleeding, but complete recovery remains out of sight.
After an extended readjustment, or bloodbath if you will, the cryptocurrency downturn seemed to turn around over the weekend of 4-5 February. But Monday's prices might have quickly dashed any hopes of a sudden bull run, with a new drop erasing most of the weekend’s gains. At the time of writing, it's back to double digit red across the board, according to CoinMarketCap.
In usual cryptocurrency form, all of the top 20 coins by market cap also showed nearly identical price patterns. It's not possible to ascribe this familiar pattern to any one factor, but many commenters online attribute it to bitcoin's price swings.
Although ETH is increasingly widely used as a trading pair, bitcoin is still the market's digital gold and a drop in bitcoin prices can affect purchasing power across the board, especially on the major crypto-only exchanges. This means a drop in bitcoin prices may be having an outsized effect on the average coin prices according to CoinMarketCap and other exchange price aggregators.
Speculators tend to have mixed opinions over whether bitcoin's price alone is really driving the entire cryptocurrency market and whether that's a good or a bad thing if it is.
If bitcoin really is underpinning the market, then the market on the whole might still be more bullish than the continuing sea of red would suggest. The majority of institutional traders, and possible bitcoin whales as well, appear to be betting on a bitcoin price recovery.
But so far there’s nothing but sheer speculation. At the time of writing, the apparent weekend upswing has petered out, and stronger signs of recovery remain elusive. It's possible that the days of extended bull runs and 500% per month price growth on large market cap coins are over, and that the current state of the market is the new normal. Or possibly not.