-
The total cryptocurrency market capitalization fell by more than 3.2% over the past 24 hours as a broad sell-off in the crypto sector mirrored declines in the stock market.
Analyst Lark Davis says the cryptocurrency market is maturing and may soon display price movements and volatility patterns similar to those seen in technology stocks.
According to the analyst, the first phase involves high volatility, after which a maturing market will gradually reduce volatility while experiencing more consistent growth.
Commenting on the recent price action among major cryptocurrencies, Davis said:
“The cryptocurrency market will start to behave like tech stocks. Lots of early volatility, and then we will essentially just see upward movement (with turbulence), because user numbers keep growing.”
He envisions a scenario in which an asset like Bitcoin currently experiences larger price corrections, not unlike leading tech stocks such as Amazon Inc. (NASDAQ: AMZN).
“By comparison, Amazon hasn’t seen a drop greater than 40% since 2011!!!! Cryptocurrencies are maturing” – wrote on Twitter.
Bitcoin fell about 3% on the daily chart, and losses were recorded across most other digital assets that day. Ethereum, Binance Coin, Cardano and Solana were among the biggest decliners within the top ten cryptocurrencies by market capitalization, while Avalanche, Polkadot and Dogecoin also posted losses.
This pattern was largely echoed in the stock market, where the Dow Jones, S&P 500 and Nasdaq closed lower on Friday. Shares of major companies such as Apple, Google and Microsoft slipped over recent days amid broader concerns about Covid-19 and its potential impact on economic recovery plans.
Largest BTC declines
Bitcoin, which reached a peak near $69,000 in November, has lost more than 33% of its value in the last month. At the time of writing, BTC is trading around $45,000. However, this is not the largest decline in the flagship cryptocurrency’s history. Over the past decade, BTC’s price has fallen by more than 80% on three occasions and by more than 50% four times.
The most severe drops occurred in 2011, when BTC lost 99% of its value, and in 2013, when it fell by 84%—both corrections were connected to the now-defunct Mt. Gox exchange. The most recent major drawdown was a 53% decline in May after China curbed crypto mining.