Bitcoin held steady on Tuesday after losing between 16 percent and 32 percent over the previous two days, with the sharp decline keeping cryptocurrencies from a 15th straight day of gains.
One unit of bitcoin, now worth about $6,200, is down about 21 percent since Sunday, when it topped $8,000, it’s lowest since January 2018. Despite concerns over the pace of growth in total bitcoin cash transactions, an underlying feature of bitcoin’s blockchain and a driving factor for the price, Ether, which leads Ether to trade more often, held mostly steady.
The total volume of trading in Ether, the world’s second-largest cryptocurrency behind bitcoin, was $77 million by midday. Trading in bitcoin cash, a fork of bitcoin that took place in March, reached $72 million.
Bitcoin has had a rough time of it since the start of the year, when the prices of the two cryptocurrency types soared more than 1,500 percent from their lowest point in late 2017. The largest cryptocurrency is down about 40 percent since January 1, and suffered its worst sell-off in years on June 30, when the price sank 37 percent from a record high.
All in all, investors moved $118 billion of bitcoin and Ether out of the market in the last month, according to analytics firm Cryptodata. Only seven new trading accounts were added in July, the lowest level since January, according to research from FactSet.
“Pessimism toward crypto markets is still extremely high and mostly driven by sellers, as there aren’t many buyers out there,” said Lance Mee, a partner at Arlington-based blockchain company Bancor, in an email.
Despite Monday’s losses, bitcoin cash and bitcoin were still up around 90 percent this year through Monday. The combined value of the three cryptocurrencies has surged from $35 billion at the start of the year to $44 billion, according to E-Toro.
Yet there are signs that investors are growing wary. The total value of market capitalization for all cryptocurrencies dropped by about $2 billion on Monday, the second-largest daily decrease this year, according to Coinmarketcap. By midday Tuesday, bitcoin and Ether were both down slightly.
In a broad market sell-off that began in the second half of May, which coincided with the first rise in the interest rate on the 10-year Treasury bond since May 2013, other cryptocurrencies went with bitcoin. Ethereum, Ripple and Litecoin had all skyrocketed, too, before those gains were reversed.
After bitcoin peaked in December, there was an exodus of investors who wanted to avoid exposure to cryptocurrencies, said Elizabeth Ferrari, a Bitcoin Alliance of America vice president, in an email. “Overall, this is definitely a good time to begin shopping,” she added.
That exodus led to a drawdown in market capitalization for digital currencies between late January and March, when it fell from nearly $300 billion to under $200 billion, according to BullionVault, a bitcoin exchange. But most of that decline was erased in April and May, when the Russell 2000 index, a broader index tracking small-capitalization companies, also rose.
That contributed to some of the recent turmoil, as bitcoin and ether accounts saw a loss of roughly $50 billion over the past two days, according to Coinmarketcap.
“Most of the money that left trading and bought long-term commodities like oil and gold is now flowing back into crypto,” Louis Gu, a director at Decred in Montreal, told Bloomberg earlier this month. “The fact that this money is coming back adds a lot of momentum to the crypto market.”
After the sell-off, bitcoin cash and Ether were still up around 90 percent this year through Monday. The combined value of the three cryptocurrencies has surged from $35 billion at the start of the year to $44 billion, according to E-Toro.