Technically Weak, Fundamentally Strong — Crypto Market Analysis

For those used to the volatility within the crpyto markets this recent drop may not faze you. However for the rest, it may seem as if the impossible has just happened and that cryptocurrency perhaps was just a fad.

While the fundamental are getting stronger everyday and adoption increases, we must accept objective reality. We have just experienced the mother of all bubbles. Markets historically follow patterns and it is unrealistic to believe that cryptocurrencies are any different.

We are strong believers in the technology but denying reality benefits no one.

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(most) Cryptos aren’t like traditional assets since their value is not directly linked to a physical entity or company this is why we tend to see such huge swings and variation in price, they are far more speculative.

While Bitcoin is down 73% and Litecoin 87%, this is still not as bad as the last bubble which saw Bitcoin fall by 85% and Litecoin 95%. We must not fool ourselves and while we should expect the best we must also be prepared for the worst.

We will use Bitcoin as the benchmark since it leads the space and the rest typically follow. Yesterday Bitcoin finally made a decisive move down creating new yearly lows and breaking its $6,000 support that had been vehemently defended for many months. This is objectively bad from a technical analysis standpoint and suggests that more pain is yet to come. All those who bought at $6k and above are now in a losing position which may explain the speed of the crash as they rushed to sell and minimise losses.

If this is to be as bad as 2013 then ~$3,000 would be the ultimate low for Bitcoin and ~$20 for Litecoin.

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Bitcoin Breaking its descending triangle pattern yesterday.

Will this happen?

Well nothing is certain in trading, however from a TA standpoint it has a greater likeliness of happening than assuming where we are now is the ultimate market lows.

Many people underestimate this space, so this is a warning. Fundamentals are stronger than ever with adoption expanding as large institutions come on board to use these networks to better their buniesses. But fundamentals are not technicals, they are two different areas and don’t always have to align. We have just experienced the mother of all bubbles, its fine that the price retraces, in fact it is healthy and to be expected, just be prepared for how much lower it could go. We started this run up in price at below $1,000 and it took a year to hit $20,000.

Crypto is not going anywhere, we have been here before and every time we fall we still come back stronger. Learn from history or be doomed to repeat it.

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