The cryptocurrency market came under impressive pressure on Monday afternoon, taking 6% off its total capitalisation to 2.12 trillion. The Fear and Greed Index for the sector returned to the extreme fear territory, dropping from 28 to 21.
It is not easy to pinpoint the new wave of pressure trigger, but it intensified and widened after the two largest cryptocurrencies gave up their key positions.
Bitcoin has fallen below its 200-day average, trading below $47K at the time of writing. Excluding the intraday drop on the 6th of December, these are the lowest values since early October, and bitcoin has lost a third of its value from its peak levels just over a month ago. By and large, the highs at 69k were the starting point for pressure on the BTCUSD. Should the decline develop, it is worth paying increased attention to the 40k and 30k levels, significant round levels where Bitcoin had previously turned to the upside.
The ETHUSD decline below 4,000 has intensified the sell-off. The pullback now exceeds 23% of the peak, signalling the start of a bear market. ETHUSD’s previous deep correction earlier this year only halted after a 60% loss, taking the price back from $4400 to the $1700 area. Should upward pressure develop, the intensity of the tug-of-war between bulls and bears could increase near the $3300, $2700, and $1800 levels, which acted as turning points earlier this year.
The whole crypto sphere is in a Bear market. Their total capitalisation is already more than 30% lower from their peaks, and attempts to consolidate beyond critical levels have failed. Last summer, cryptocurrency investor interest returned after capitalisation fell by more than half. This suggests the potential for a further 30% decline from current levels.