The price of bitcoin had fallen to as little as $3,570.29 at the time of report, down roughly 10.6% in the last 24 hours and 11.2% from the start of the day, according to CoinDesk bitcoin price data.
Other major cryptocurrencies had suffered even greater losses, with ether, litecoin and bitcoin cash having declined 16.5%, 16.4% and 16.3% over the last 24 hours, additional CoinDesk figures reveal.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
These widespread declines took place right after a drop in the sentiment surrounding most of the 10 largest digital currencies, noted Joshua Frank, cofounder of cryptocurrency analytics platform TheTIE.io.
"For bitcoin, hourly sentiment actually dropped negative at 3:45PM yesterday and remained negative throughout the drop," he noted.
"Bitcoin's hourly sentiment has remained negative, and it is ranked 113th out of the 118 coins that we are currently tracking sentiment on," added Frank.
In spite of this, he described the recent pullback as "a short-term correction," emphasizing that "Our longer-term sentiment metrics are much more neutral on Bitcoin."
Robust Twitter Activity
Before the widespread declines in digital currency markets, the top digital currencies experienced a greater number of tweets.
"For all of the top 20 cryptocurrencies by market cap, tweet volume increased preceding the dip this morning," said Frank.
"The column relative tweet volume, shown below, looks at the number of tweets today about a specific cryptocurrency vs. a 30 day moving average," he stated. "So a relative tweet volume for bitcoin implies that conversations around bitcoin increased by 21% today."
"You can also see that for all of the major cryptocurrencies, other than Bitcoin and XRP, hourly sentiment has returned to neutral or high."
While analyzing social media activity can help grant insight into the sentiment of traders, it is not the only tool that can be helpful in this respect.
Technical analysis can also help shed some light on sentiment by looking at key market activity.
Jon Pearlstone, publisher of the newsletter CryptoPatterns, offered some insight in this particular area.
He spoke to bitcoin's potential upside, stating that:
With the 2018 trend line at $4500, a reasonable expectation for a bullish move would be a retest of that trend line. Red flags started to show when buyers couldn't take price convincingly over $4000 after multiple attempts over the last week, and there was weak buying volume. When price levels cannot breakout, they usually reverse lower to retest prior key support levels and that's exactly what we're seeing today. The much higher volume today and sharp drop in large altcoins are also worth noting.Pearlstone also provided some input on the digital currency's potential downside, indicating that:
"There is solid support at the $3500 level. Below that is a likely retest of the 2018 lows at $3000."
Disclosure: I own some bitcoin, bitcoin cash and ether.
Source: Google Alert, Taken From Forbes