David Jones, Chief Market Strategist of Capital.com:
Investors in the cryptocurrencies have not had the best of years in 2018 – and once again have seen sharp falls over the past couple of days with the likes of Bitcoin and Ripple down by more than 10% since Tuesday. What will be frustrating for many is that here had been something of a recovery in recent weeks with Bitcoin climbing from $6,000 to above $7,400. But much of those gains have been wiped out in this latest slide.
As ever when it comes to the world of cryptocurrenices it’s not that clear why the markets have experienced such a sharp fall. As the hype has left this alternative asset class this year, much of the news-flow has dried up too. Sentiment plays a major role in all financial markets – and probably even more so in the world of crypto currencies. There have been many false dawns this year when it comes to recoveries in the price – and lots of investors are no doubt nursing heavy losses following the bursting of the bubble at the beginning of 2018. These are markets prone to panics – and it looks like they have experienced that in the past two days with a bit of selling turning into a steep plunge, as investors and traders alike bail out on the first signs of weakness.
The next few days will be interesting – all this year the $5,500/$6,000 zone has proved to be a floor for Bitcoin. After the knee-jerk selling it wouldn’t be surprising to see some calm return and for the price to stabilise once again. But this week has been a reminder, just in case anyone needed it, that the crypto currencies still are one of the more volatile and fickle assets out here – and sentiment can change incredibly quickly.
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