Cryptocurrencies are down for a second straight day with bitcoin below $10,000 again.
Thursday has been a gloomy day in the cryptocurrency markets, with more than 95% of the top 100 cryptocurrencies in the red. Bitcoin (BTC-USD), which had rallied to more than $11,000 recently, is back below the key psychological $10,000 level again.
Is this just profit-taking as many experts are suggesting, or is demand for cryptocurrencies starting to fade?
Today’s cryptocurrency prices
Here’s a quick look at the five largest cryptocurrencies by market capitalization, and how much each has changed over the past 24 hours.
Cryptocurrency Name (Code)
Price in U.S. Dollars
Bitcoin Cash (BCH-USD)
The major cryptocurrencies are all in the red today. In fact, of the 100 largest cryptocurrencies by market cap, only three are in positive territory on Thursday.
Many cryptocurrency analysts are brushing off the recent drop in bitcoin and other major cryptocurrencies as profit-taking, and not anything investors should be too concerned about.
In an interview with CNBC, Nick Kirk, quantitative developer and data scientist at Cypher Capital, said that the bitcoin (BTC-USD) sell-off is profit-taking and “a bit of resistance at the 10k to 11k price point.”
This is certainly a logical explanation. After all, even with the drop of the past couple of days, the cryptocurrency market has risen from a low market capitalization of $276 billion on Feb. 6 to about $445 billion now. So, it’s certainly conceivable that many people have made profits and are cashing in.
It’s also common for assets (stocks, bonds, and even cryptocurrencies) to run into resistance, especially at key psychological levels like $10,000 for bitcoin (BTC-USD) or $1 for Ripple (XRP-USD). These are logical selling points for profitable investors, so it makes sense that it can be tough to remain over these thresholds.
Some concerning news
While the profit-taking argument certainly has merit, the latest downward move comes after the SEC charged former cryptocurrency exchange BitFunder and its founder with fraud, alleging that they ran an “unregistered securities exchange.”
There is lots of uncertainty among U.S. investors concerning how the government will ultimately classify, and therefore regulate, cryptocurrencies. This latest news could be adding to that uncertainty, and therefore could be weighing on the industry.
The bottom line is that for the time being, there’s no reason to panic. A 6% drop in a cryptocurrency is actually a rather mild move, and most cryptocurrencies are still well above their lows reached earlier this month.
Demand doesn’t seem to be falling much
One thing is for sure. The demand for cryptocurrency trading doesn’t appear to be dying out. Quite the opposite, actually.
A few weeks ago, commission-free stock-trading company Robinhood announced its plans to offer commission-free bitcoin (BTC-USD) and Ethereum (ETH-USD) trading through its platform, and the company has now begun to slowly roll out the new features.
So far, only certain users in a few states have access, but the company plans to continue its rollout. And there are lots of interested people. As of this writing, the waitlist to get access to Robinhood’s cryptocurrency trading is more than 1 million names long.
There are several negative catalysts that could cause cryptocurrencies to fall, but it doesn’t appear that “lack of interest” will be the reason, at least not anytime soon.
IMAGE SOURCE: GETTY IMAGES.
Author: Matthew Frankel