Bitcoin and its altcoin brethren have been on a tear for the past two weeks in April, but critics quickly emerged from their slumber when the crypto-verse went into full retreat on Friday. Bitcoin, for the record, had risen over 30% during April, peaking at $5,400, which was almost unheard of a few weeks back. On Friday, however, total crypto market cap figures took a $20 billion dive, causing fluttering hearts in the crypto faithful and reviving the cynics in the industry to again claim that doom and gloom was all that was ahead.
The pullback soon ended when bulls returned, after a foreseeable round of profit taking, and pushed the Bitcoin barometer back to the $5,100 level. It has hovered around that support point for the weekend, without any fireworks to speak of, but technicians were quick to jump upon their favorite charts and claim that a reversal was in progress. All of the gains in April must have been for naught, according to this crew of skeptics.
One case in point was a crypto analyst that goes by the name of “The Cryptomist”. She proclaimed that:
$BTC There is the start of the drop I have been saying. RSI channel MUST break. Evaluating the RSI again, I do believe we could go low as $4390 (.5 fib) $4.2 (.618 fib) level. I’d be surprised if we go lower (will re-evaluate when levels reached.) 48 & 39 RSI I’m watching.
If you are into technical charts, it can be entertaining to draw all sorts of lines, channels, converging triangles, and Fibonacci guideposts for support and resistance, but, at the end of the day, these drawing exercises are based on previous pricing behavior. At least Elliott Wave theorists attempt to take the overarching trend into their analysis when making a prediction, but most analysts scoff at this kind of analysis as being too subjective. The point here is that the prediction above of a dip to $4,200 is a guess, and nothing more. If it comes true, “The Cryptomist” may gain notoriety, but the primary trend is most often more important than a small tumble in recent prices.
And the primary trend since January has been in the upward direction. Small corrections from time to time are to be expected, a reflection of a healthy market, where some investors chose to cash in and other investors choose to join in the action. The recent knock on Bitcoin’s good graces has been that trading volumes have not been representative of an asset that is gaining momentum. There have been several recent reports that claim that much of the volume reported by system aggregators has been fake, as much as 90% in some quarters. Whether fake or not, to base an argument on volume data alone is suspect in the crypto space.
Analysts at Bloomberg, however, do not like what they have seen lately in the volume arena:
A highly speculative market rallying on declining volume is not healthy. Typically you need good, strong volume and transactions to indicate an enduring trend. Bulls appear to be grasping at straws or what best fits their more emotional less rational views, positions. The emotional enthusiasm the past week appears too extreme.
Yes, “emotional enthusiasm” may indeed be present, but the fact remains that major inroads are occurring in the institutional space, making way for an inflow down the road for substantial participation by large banks, hedge funds, and individual investors. The conclusion reached by one recent research report is compelling: “From data collected by cryptofundresearch.com… the ‘institutional proportion’ overall could be less than 7% for the cryptoasset market.” The analysts at Binance Research contend that this figure is considerably less than what is experienced in traditional equity markets by multiples of “10”, signifying that institutional involvement in the crypto space has a long way to go.
Mati Greenspan, a crypto analyst at eToro, sees a positive takeaway from last week’s market activity:
After the false breakout earlier this week, cryptos took a step down. The fact that we failed to go further up speaks volumes about the current appetite, but it doesn’t necessarily mean it will go back, as many bears indicate. In fact, in my view, the most likely scenario is that we now create a new range, or even, hopefully, a sustained stabilization… The market is clearly still excited.