Following the near 10 percent decline in the bitcoin price on Saturday, the altcoin market has sharply plunged once again. XRP and Ethereum, in particular, are now down by 94 percent and 91 percent respectively from record highs.
The underwhelming performance of altcoins have led the valuation of the entire cryptocurrency market to drop by more than $100 billion since early March.
Why does this feel so familiar pic.twitter.com/8mSWsDucA5
— DonAlt (@CryptoDonAlt) March 27, 2020
XRP and Ethereum see gloomy short-term trends
In recent weeks, the price of XRP has declined to levels unseen since mid-2017 despite substantially lower institutional sales of XRP by Ripple.
Throughout the past year, small market cap altcoins have generally followed the near-term price trend of XRP; when the price of XRP slumps, low market cap cryptocurrencies also tend to underperform.
The lackluster momentum of XRP and three consecutive lower highs at a macro level indicate that there is low demand from buyers to lead a strong recovery for XRP in the short-term.
While Ethereum has performed better than XRP since early 2020, it is seeing a similarly stagnant trend, influenced by the inability of bitcoin to break out of key resistance levels.
Prominent cryptocurrency trader DonAlt said earlier this week that the price of Ethereum would have to rebound to at least $150 to see any possibility of a major recovery.
“The USD pair looks even worse. ETH dropped by 90%+ and is now ranging putting in lower highs and lower lows. I like being bullish as much as the next guy but as long as ETHUSD is trading & closing below $150 I see little reason to expect higher prices.”
Currently, the price of Ethereum is hovering at $128, and it would need to see a 20 percent upsurge in the near-term to kickstart an extended rally.
Does the crypto market have any catalyst?
Whether key catalysts exist to trigger a 20 percent increase in prices across the cryptocurrency market remains unclear; especially as the level of fear towards the coronavirus pandemic continues to intensify.
As financial analyst Metronome GK said:
“Assume that markets are crashing and businesses will suffer, there is no way any market will survive this historic Coronavirus affected pandemic crash. Crypto markets will bleed into oblivion and many say it will take years to recover”
Technical analysts generally believe that for the altcoin market to see revived momentum in the upcoming weeks, bitcoin would have to show strength as a result of the global equities market bottoming out.
With second-quarter earnings in the U.S. stock market yet to be released, analysts remain negative about the near-term trend of the stock market as well.