Crypto Market Cap Falls To Year Low, How Low Can We Go?

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Crypto Market Cap Falls To Year Low, How Low Can We Go?

By Tom Whitbread
November 19th, 2018

As capital rapidly flows out of crypto markets, the global market cap slips further down away from $200bln to now rest at $178bln, bringing with it a new year low. Is there further room for downside? And what happened to a november rally?

This week saw Bitcoin finally breakdown through key support to find a new year low of $5200, with  BTC dominance rising inversely to a year high of 53% and the majority of alt-coins resetting this years gains or going negative.

Although some traders see this as a buying opportunity, despite a almost certain near term bear trend, fundstrat's Tom Lee has revised his end of year expectations down to $15k.   

It appears selling pressure combined with the BCH ABC/SV hard fork, finally broke the $6k~7k support range that Bitcoin had traded in tight consolidation for months now - to test new year lows. 

With the hard fork being the catalyst, causing funds moving from BTC and into Craig Wright Satoshi's Vision (BCHSV/BSV) and Roger Ver's ABC (BCH) flavours of Bitcoin Cash, there has been considerable outflows to Bitcoin, potentially causing fear and panic selling in the  majority of the alt coin retail markets. 

Hashrate Wars

The hashrate war that is currently been going on since the fork on 15th, earlier in the week - has seen a interesting curve with Ver's BCHABC taking the lead to begin, and now the two sitting neck to neck.

Considering regular good old normal Bitcoin BTC is now 120% more profitable to mine, will this fork be rewarded?

Craig Wright certainly has a lot to say about the future, making many claims during his recent interview with Tone Vays, saying he will be able to reverse transactions on the ABC fork, and essentially render any other BCH variants completely useless,whilst registering so many patents that no one else can ever develop the technology. 

Of course these kind of comments cast a huge shadowy cloud of unfounded doubt across the markets, as there is no proof as of yet. That doubt is certainly a factor we must bear in mind, and plays as a considerable accelerant in the capital outflows seen presently. 

All of these outbursts are causing many people to once again question Craig, reminding him if BTC was more of a conventional security trading on a US stock market, the SEC would certainly be having words. But as it is not, he can do as he pleases. Which he reminds us about in much more colourful language on twitter almost hourly. 

As always his tweets have been entertaining to follow, like for example moments after the fork on the 15th when his egotistical hashrate flexing quickly backfires and Roger Ver's ABC fork takes the lead, to read more you can follow in the comments embedded below.

Ripple XRP has certainly taken the most benefit during this weeks sell off, seeing XRP rise to #2 in the global market cap, swapping places with Ethereum. Despite trading below $0.50 down -7% this afternoon, there is still plenty of bullish sentiment towards Ripple taking the lead and staying above Ethereum for a longer duration this time. With some even as bullish to say it can take first place in 2019.


2018 December Bull?

So what happened to the end of year bull run? Sentiment is more polarised then ever with Bloomberg sharing predictions of a drop further down towards the $1k level, where as McAfee is still sure he wont be having to eat himself, live on national tv. 

Anything is possible, although nearterm it does look very bearish, there has been no sharp reversal and rush of demand at this level where previously we reversed rapidly. This is notable as every prior drop to these levels saw a bullish surge of demand. Now there is far more pressure on the selling side.

Retail Capitulation 

As european traders wake up, markets open this week and we drop down lower again. Volume is still mostly unchanged although with no fresh inflows coming, short term retail investors looking to make a quick trade may cut losses this week and seek other grounds for christmas, this could cause a knock on effect especially combined with the current high dollar and high rates on credit.

A long squeeze from a more recent layer of speculation may add further weight to the fall, as positions who doubled down on the recent drops also pull out their stops. Eventually we will see where the support rests, although presently we must wait until the lows become highs.

Where Did All The Bulls Go?

Bullish sentiment still remains and is currently focused around the huge steps the lightning network has taken, especially in the recent days since the BCH hardfork. 

BTC's faster than visa Lightning network has now surpassed a million USD in capacity, making a first since its inception, with total network capacity at $1.8mln and 4000 payment channels now open.

WIth Bakkt futures coming december 12th, and the VanEck ETF being approved by the SEC could this bring the inflows back to lift the markets back up towards last years bull trend? 

In an interview for CNBC Africa's Crypto trader - Gurbacs, the director of Digital Assets Strategy at VanEck said that VanEck’s bitcoin product would provide a growth opportunity and offer protection to investors.

“What sets our ETF apart is that it’s a physical bitcoin ETF. So, it stays true to the bitcoin you own in the underlying,” he explained. “It’s fully insured so if there is any theft, hacks or losses; then the insurance covers it.” 

“Our gold ETFs are already in a few billion dollars range,” Gurbacs added. “There are gold ETFs in $10 billion range as well. I wouldn’t be surprised if a Bitcoin ETF gets in a few billion dollars range.”

VanEck's Gurbacs also predicted that a bitcoin ETF could perform much like a traditional gold ETF. More risk conscious Institutional investors, that see spot markets and exchanges as sub optimal, could find BTC ETFs as a solid investment vehicle. How large an impact this would be is probably not enough to move the price of BTC much more than a percent or two, during the interview Gurbacs gave a ballpark that on the very first day of a BTC ETF it could attract as much as even $1 billion in investments.

He also highlighted how they would protect the investors from price manipulation.  "The pricing that we use for bitcoin comes from our indexing subsidiary, a regulated entity which provided the first financial standard and regulated indices. The ETF is institutional-oriented, so we have a cap of 25 Bitcoin per basket.”