On September 24, the Bitcoin price dropped from the skies. That drop resulted in more adverse effects on altcoins. The top altcoins registered losses of over 15% on average. Ethereum rapidly dropped past the $200 psychological support and tested the $150 lows. Litecoin, Bitcoin Cash, and XRP also smashed their support levels violently and dropped way below.
The altcoins are nearing in on the year to date rise as a result of the revival of the Bitcoin bears. This latest plunge was of humongous proportions because of the violent price action in Bitcoin. The BTC price has moved within a descending triangle in a pattern known to symbolize an imminent bearish trend in the technical analysis.
Nonetheless, various investors hoped that Bitcoin would smash the resistance line, particularly after the crypto has experienced several highs moving higher than the upper line of the pattern. In spite of everything, the technical analysts suggested that the BTC price would break below the support line and could even crash to $7,200. That scenario seems more probable now.
Coinmarketcap data registered that Bitcoin hit a low of $8,370, the lowest level since mid-June. However, Bitcoin has recovered some of these losses and it is now trading above $8,500. However, it has declined by over 12% in the past 24 hours. The plunge in bitcoin has taken down the entire crypto market with Bitcoin Cash and EOS plunging more than 20%.
The General Market Overview
Most of the top altcoins have followed a similar pattern to that formed by Bitcoin rising and falling as BTC does. They have all moved almost in synchronization in 2019. Thus, the drastic drop in the price of BTC or any other top crypto may act as a trigger for the others to follow suit.
The total market capitalization of altcoins broke down below the 200-Day Moving Average on the daily and weekly charts. Notably, the markets tested the consolidation levels before the massive break-out in 2017. But, the momentum is now reversed.
Bitcoin dominance seems to be rising again towards 70% with some suggesting earlier that the altcoin cap/bitcoin is currently testing a critical support level. Any drop that is more than 5% from this level can introduce another round of the bears. Willy Woo’s said:
“If this level fails, I’d expect roughly a 60% drop relative to Bitcoin’s cap before we some the next area of support.”
For now, BTC price is looking to hold the $8,500 psychological support level. Any price action in any direction will act as a cue for the altcoins to follow.
Bitcoin Drop Triggered by Flash Crash in Hashrate
The latest drop in the bitcoin price was preceded by a shocking and severe flash crash in its hash rate. That drop in hash rate is shown by Blockchain.com data. Bitcoin’s hash rate has tumbled by almost 40% on September 23, a colossal negative record for the bitcoin market.
The crash is not yet explained and it remains surprising after it had risen to its all-time high just days ago. This measure represents the mining difficulty as the competition among the BTC miners grows with every passing day with focus gradually shifting to the imminent halving of May 2020.
The best answer could come from China since it is the home of many dominant mining entities. Reports emerged recently that China was planning to eliminate crypto miners from its territory. But, the process is yet to start officially.
Grippingly, the flash crash in the hash rate comes at the same time the UN Climate Action Summit was held between September 21 and 22. That event might have put some pressure on the miners who majorly rely on dirty energy to generate new blocks.