The week started though with huge volumes of selling and major support levels breaking that brought Bitcoin’s price below 7500$ on Sunday. After a though start to the week the market has started to stabilize and recover. Last week massive selling overwhelmed the markets and most cryptocurrencies reached record lows for a brief period of time.
Negative news and rumors came out and were the main factor that tumbled the markets. The cryptocurrency pullback happened mainly because of fears of harsher regulations and other specific situations. You can read last week’s Price Analysis to read more about what happened.
Most cryptocurrencies bounced back a little. Of course there are some that are not performing well, but others rallied out of control. Without question, the big winners so far were TRON and Icon who not only bounced back but even doubled in Ethereum and Bitcoin price.
News about Binance that influenced the prices
Earlier this week news came from the Japan Financial Services Agency (FSA) that it issued a warning to Binance for operating in Japan without a license. Binance is founded in Hong Kong and is the largest cryptocurrency exchange by volume and registered users. The news was reported by Japanese mainstream media outlets and some misrepresentations of the situation scared a lot of people who panicked and opted to sell.
According to Binance founder Zhao Changpeng the company is in conversations from awhile to get a license from the Financial Services Agency. The cryptocurrency exchange operates internationally with millions of users all across the world. Japanese users could trade on the trading platform as they could trade on Bittrex, Upbit or any other cryptocurrency-only exchange. Binance could face criminal charges by Japan’s Financial Services Agency for serving local investors on its platform.
These charges could be filed if Binance “fails to halt its Japan operations”. Binance founder Zhao Changpeng released a statement that they are actively working on the possibility to open an office in Malta. In his statement he also wanted to reassure Binance users that the misrepresenting from the mainstream media outlet Nikkey was irresponsible and unprofessional.
“Nikkei showed irresponsible journalism. We are in constructive dialogs with Japan FSA, and have not received any mandates. It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them… No need to worry. Some negative news often turn out to be positive in the long term. Chinese have a proverb for this. New (often better) opportunities always emerge during times of change.”
The Markets are dependent
The cryptocurrency market cap dropped with around 25-30$ billion or around 10% almost immediately after the Binance situation was announced. Of course the decline should not be attributed only to the Binance situation. If it was the sole reason, the markets should have bounced back instantly.
The Asian region is responsible for the majority of the cryptocurrency trading volume so they have a large influence on the markets. The Binance situation can also turn positive for the company and can provide an opportunity for the company to operate legitimately. If they manage to reach to an agreement with the JFSA, the company can operate within Japan as a regulated financial service provider. After all Binance is the second largest cryptocurrency exchange in the country and will probably want to keep its place.
The cryptocurrency market has showed a similar pattern in the price movement of individual cryptocurrencies. Throughout the past two weeks the market has dropped with 10-15% then recovered from the correction, then drop again 5-10% and a recovery after.
A bigger factor than the Binance situation are the whales. Whales are single entities that are controlling the majority of the cryptocurrency circulation. With this much power, they are able to control and manipulate the prices, especially in times where the volumes are decreasing. Pump and dumps can be seen regularly, especially for cryptocurrencies with low volumes of trading. The good news is that big volumes are coming back.
Best performing cryptocurrencies
For the last week the biggest winner in my book is definitely TRON (TRX). It skyrocketed and increased by more than 100%. With most of its volume in Binance and Upbit, the currency exploded and will be interesting to see if TRON can reach the peaks it reached at the end of 2017. TRON has remained the biggest cryptocurrency by volume in Binance and is continuing to stay on the number one spot.
Storm (STORM) was also one of the big winners. Storm is an Ethereum-based blockchain platform that incentivizes users for carrying out micro tasks. The cryptocurrency increased by around 200%. It had almost no volume, but now it has exploded and the whales are at it. At the day of the pump, Storm was the most liquid cryptocurrency in the market behind Bitcoin.The majority of Storm’s trading volume was generated by Upbit, South Korea’s second largest cryptocurrency exchange. They listed Storm recently and it was enough for the whales to do their thing.
Binance (BNB) Coin was also one of the biggest winners. Since Binance released their plans on creating a Binance Chain, the coin exploded. It increased by 200% in Ether price and more than 120% in fiat currencies. The coin is used on the Binance platform for trading and will get new uses as the company’s plans go forward.
ICON (ICX) also experienced a massive rally. Considered South Korea’s Ethereum, Icon’s value skyrocketed after Bithumb listed it last week. Bithumb is South Korea’s largest cryptocurrency exchange and the listing had a massive effect for the currency. Since the beginning of 2018, volumes on South Korean exchanges were declining. As one of the bigger players on the market, the declining South Korean volumes impacted the markets.
During the correction many South Korean investors were damaged by the rapid decline of the major cryptocurrencies. Cryptocurrency analysts predicted that the South Korean market will take at least few months to recover. This may not be the case as positive cryptocurrency news and positive public figure opinions can lead the market to a faster recovery.
Over the past few days, daily volumes of Bitcoin, Ethereum, Ripple and other major cryptocurrencies were remaining low and affected their prices. As Bitcoin and the other leaders begin increasing their volume on the larger exchanges, we may see the market recover to previous levels. Bitcoin is staying stable between 8,500$ and 9,000$. The price stays above the descending channel, which is a positive long term sign. If Bitcoin manages to break through the 10,000$ mark and stays there, it is highly likely that we may see a rally back to 12,000$.
The past week Ethereum is staying stable between 510$ and 570$. Currently the bulls are trying to push Ethereum’s price back above the descending channel. If they succeed, Ethereum can easily return to above 650$. Ripple (XRP) is another one of the underperformers. It started strong after the dip, but the price has been correcting back and forward. If the bulls pick it up again, we may see another bull runs with Ripple, but if now the road going down is steep.
Volumes are increasing
The CEO of Binance, Zhao Changpeng said that volumes across the bigger cryptocurrency exchanges have increased and are back. The increasing trading volume signals that there is an increase in cryptocurrency demand again. The lower prices of major cryptocurrencies are looking more attractive to cryptocurrency enthusiasts. As Zhao said:
“It is good to see that volumes are returning across the board”.
The cryptocurrency market is demonstrating a large increase in day to day trading volume, which was declining February 2018. An expert in financial market research, Aaron Brown said that the demand for Bitcoin and Ethereum has not increased nor decreased. The price movements have remained stable for now. He wrote:
“Both using historical actual price movements or option implied volatilities, volatility seems to be about equal across exercise prices. This suggests Bitcoin price movements are smooth, like a normal distribution, rather than characterized by fat tails, jumps and changes in volatility like most assets. Bitcoin volatility is very high, but the volatility captures all of the risk.”
If the current increase in daily trading volume continues, the market will be able to rebound from last week’s dips. The global mood towards cryptocurrencies is as good and positive as it ever was. I have a feeling that the next 2-3 months will be full of exciting news and developments of the industry.
We will be following everything that happens in these exciting cryptocurrency times. If you want to be up to date with what is happening in the industry, you can continue to follow us as we keep informing our readers about the most important news and details. You can also subscribe below to our weekly newsletter, as we make sure to provide a weekly news recap and a weekly price analysis that can help you in your cryptocurreny adventures.
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