Short-term bullish moves don’t mean we are out of the bearish trend.
Short-term bullish moves don’t mean we are out of the bearish trend. The crypto markets fared quite well this weekend. The total market cap excluding bitcoin grew 10% and the original cryptoasset also showed its strength. By Saturday, 2 AM UTC, bitcoin rose from £4.7k ($6.6k) to £4.8k ($6.6k) and has been steadily climbing up to £5.1k ($7.15k), where it now stands. Could it be running out of steam though?
Some hope the bearish days are over due to a ‘double bullish divergence’ in bitcoin and a possible falling wedge reversal. However, with regards to bitcoin, most traders are ‘cautiously bullish’ as they may be reacting to a rising wedge pattern. This is an overall bearish indicator that usually anticipates short-term growth — in this case with a target of £5.2k ($7.3k) — before continuing the previous bearish trend. Furthermore, just like we faced parabolic growth during the bull run, it seems bitcoin is facing a ‘textbook downwards parabola’. This would need a couple more months before a positive breakout.
Aside the daily technical analysis, fundamentals are continuously improving. The usual Brave New Coin article — just published — sums it up, and still maintains a possible £21k ($30k) bitcoin target for July 2018. According to the article, there is a focus on improving network performance, growing OTC volume, and new institutional money entering the markets — with Rothschild, Rockefeller, and Soros preparing to trade cryptoassets. Firstly, so what? Secondly, will they ‘hodl’ or short? Lastly, how significant are their positions?
Moreover, if we zoom out on one of the most popular projects — Doge — which has acted as a reliable marker for the alts market cycle, it seems we are still one step above the historical bottom level. In BTC terms at least, as it appears most alts’ USD values “are back to their pre-December rally” levels.
However, as most alt markets are still priced in terms of BTC, that might not mean much. “High valuations and irrationally high optimism” surrounding alts won’t contribute to a magical reversal of the bearish trend. Nevertheless, it was a good sign that ether broke a major resistance against the dollar and seems to have tested the bottom against BTC.
Could it be that ether’s price is very reflexive to ICO’s volume? Meaning there’s a strong feedback loop that drives demand for ether when expected ICOs’ returns are high, and vice versa? Some influential people in the space even claim Ethereum “is the Yahoo of our time”. Check this comparison between Google and Yahoo for a better illustration and read these “doubts about the long-term viability of utility cryptoassets” for more.
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