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The total cryptocurrency market capitalization has fallen more than 3.2% over the past 24 hours as widespread selling across the crypto sector mirrors weakness in stock markets.
Crypto analyst Lark Davis says the cryptocurrency market is maturing and may soon exhibit price behavior with volatility patterns similar to those seen in tech stocks.
According to Davis, the early phase of a maturing market involves considerable volatility before price swings gradually subside and steadier growth takes hold.
Commenting on the current price action among major cryptocurrencies, Davis said:
“#cryptomarket is going to start acting like tech stocks. Very early volatility, then we basically just see them trend up (with turbulence) as user bases continue to grow.”
He pointed to a scenario where an asset like Bitcoin endures sharp price corrections today that resemble the drawdowns experienced by leading tech names such as Amazon Inc. (NASDAQ: AMZN).
“For reference, Amazon hasn’t had pullbacks over 40% since 2011!!!! Crypto is maturing,” he tweeted.
Bitcoin has slipped roughly 3% on the daily timeframe, and most other digital assets also show losses for the day. Ethereum, Binance Coin, Cardano and Solana are among the biggest decliners within the top ten cryptocurrencies by market capitalization, while Avalanche, Polkadot and Dogecoin are also down.
This pattern is largely mirrored in equities, where the Dow Jones, S&P 500 and Nasdaq closed lower on Friday. Blue-chip tech names such as Apple, Google and Microsoft have all declined in recent days amid broader concerns about Covid-19 and its potential impact on economic recovery plans.
Major BTC price crashes
Bitcoin, which reached highs near $69,000 in November, has lost more than 33% of its value in the past month. That retreat brings BTC down to about $45,000 at the time of writing. However, this is not the largest slump the flagship cryptocurrency has endured. Over the past decade, BTC has fallen more than 80% on three occasions and declined more than 50% on four occasions.
The largest crashes saw BTC plunge 99% in 2011 and 84% in 2013 — both corrections linked to the now-defunct Mt. Gox exchange. The most recent major drop was a 53% crash in May following China’s crackdown on crypto mining.