The Easter weekend brought more volatility and trepidation to the cryptocurrency space, as the total market fell to its lowest level since November. If recent price action is any indication, correlated movements are becoming stronger as bitcoin asserts greater dominance on the overall market.
Bitcoin Leads Crypto Market Lower this Weekend
The crypto market fell as much as 9% over the weekend to reach a new four-month low of $243.5 billion, according to CoinMarketCap. The decline followed a minor bounce on Saturday that failed to generate a sustained rally. By the start of Monday, the total market was valued at $265.7 billion for a gain of 5%.
Losses mounted after bitcoin encountered the so-called “death cross,” a technical indicator that describes a bearish cross over between the 5o-day moving average and 200-day moving average. Technical traders use moving averages to gauge price action and signs of trend reversals in the market.
The death cross formation was expected to generate further downward pressure for BTC, but as of Monday, that hasn’t materialized. The cryptocurrency found a bottom around 6,440 on Sunday – a nearly two-month low – but has since returned above $7,000.
Bitcoin’s Dominance Grows
While bitcoin has always dominated the crypto market, its influence has steadily declined since the start of 2017. The coin’s share of the market slipped to a low of around 32% earlier in the year as altcoins surged to record highs. Bitcoin’s dominance index returned above 45% recently, which means more correlation and less price independence for the overall market.
Price independence is one of the most important features of a mature market and its breakdown in recent months suggests bitcoin has re-emerged as the primary trendsetter. This is a clear indication that the market has not stabilized from its most recent correction, which appears to have culminated over the weekend.
Since peaking near $20,000 in December, bitcoin has shed more than $200 billion in market cap. In percentage terms, the coin’s latest correction is the third-largest in history. The previous corrections, which amounted to multiple 80% declines in 2014, took 12 months to recover.
Although there was no immediate catalyst behind the recent down move, some analysts have warned not to underestimate the impact of the so-called Tokyo Whale – the trustee charged with liquidating the Mt Gox Exchange. The Whale, who goes by the name of Nobuaki Kobayashi, has already offloaded some $400 million worth of BTC and bitcoin cash. Sources say there’s an additional $1.9 billion left to liquidate.