Not long ago, November of 2021 seemed like it was a guaranteed success for all invested in the crypto markets. It already broke some records in terms of price and market cap, but it also presented a very strong setup for future record-breaking moments. All of this coincided with the latest big update of the bitcoin network. After many months of development, Taproot got launched in November and the application of the same update went without a hitch. On top of all of that, the same month has been historically a great period for bullish sentiment, allowing traders and investors to ride a wave of strong liquidity influx into the crypto networks.
But, starting around the middle of the month, the price value began sliding for bitcoin and ethereum. The same began for the other altcoin networks as well, throwing a wrench into what seemed like a machine ready to kick into its highest gear so far. Now, the prices are in a flux of broken support likes, which were 60,000 USD for the BTC token and 4,000 USD for the ETH token. Many analysts are actively pointing to the possibility that the slide will continue. In that case, the bottom of the crash of prices might still be some way away. However, the fully defined bear narrative is also not completely in play according to most of the experts. Because of that, the chance of a slide down seems as big as that of a consolidation, which could allow for a gradual bullish sentiment return. However, one thing is sure: the set wisdom that November will shatter additional cryptocurrency records is now all but gone.
After hitting a range of record values several weeks ago, the crypto markets entered a period of sideways trading. This refers to the movement of the markets and more precisely token prices that are not going up or down, but generally moving sideways in terms of value. While in this mode, investors and especially traders have little to do, because there are neither bearish or bullish chances on any immediate horizon. Also, the natural state of high volatility means that these sideways periods are bound to end sooner or later not just for the BTC token, but also for any other digital currency.
This happened finally when BTC began its slide towards the 60,000 USD support line and then blew it, revisiting the 50,000 USD range for the first time in several weeks. That signaled the end of any sideways period and began a clear move down, which was then quickly mirrored in other digital currencies as well. Through all of that, the wider public once again became more accustomed to the bearish atmosphere. It usually dictates that the cryptocurrencies are losing value, but also opens up a way towards further losses in the days and weeks to come.
The rule of thumb for any downside in the crypto domain is that some kind of regulatory worry is standing behind it. In this case, the same happened in the US, where the authorities are pointing to a new way of taxing crypto gains and overviewing the process of crypto trading in general. This is by no means a new thing for the United States or any big country either, as most of them are growing aware of the potential and possible issues that crypto transactions can have on a massive scale.
So, chances are that this is something more in line with a scare than a real problem that crypto traders and investors might have with the US government or its tax office. But, the mechanics of social media, esports, and any other contemporary system that is digital-only are that rumors and hypotonic discussions spread fast. In this case as well, while there might have been no immediate huge rumor, news got around that things might get tougher in the US for anyone in the crypto business. That enforced the already shaky position that the markets had prior to that.
Loss of China FUD
One of the most distinct factors related to the current drop in crypto prices is the fact that it comes free from the so-called China FUD. This term stands for the Chinese-related fear, uncertainty, and doubt, which is how the crypto community labeled the regular news articles about how this country is in some shape or form banning crypto. Yet, this summer, that process took place and for a lack of a better term, it is safe to say that China finally did ban crypto, as well as crypto mining.
With a total restriction on practically anything related to crypto dealings, the Chinese nation is now an ever-shrinking part of the crypto landscape. That comes with some downsides, but benefits as well, mainly because it is no longer possible to scare jittery investors with the same type of news. So, this time, the idea of the mass media suddenly decided that China is also doing something bad for the state of crypto is not an option. That in itself allows for a more positive outlook on the depth and length of the price slide.
When all of these factors are taken into consideration, it seems clear that the ongoing slide is not capable of pulling the prices way down, especially not below the next major support line. That is 50,000 USD for BTC and anywhere between 3,000 USD and 3,500 USD for ethereum. Instead, as many analysts already noted, this drop in price value seems to be of a limited nature. But, even with that limit, the number of days left in November is not big either. But, there is nothing standing in the way of a great December for the crypto markets. It could push the prices back up just as more investors take part in the market and also drive the market capitalization of cryptocurrencies to the next record-breaking point.