Cryptocurrencies are crashing. Ter the last 48 hours most of the largest cryptocurrencies lost approximately 30%. Is this time to fright and sell everything (spil implicitly suggested by this Forbes author)? Or is this a buy chance?
Before looking into the details wij would like to stress the fact that this type of volatility makes an investor intuitively think that he/she has to act. However, that is a big tour. Do not leave behind that not trading is also a form of trading.
Let’s see what the charts have to say about our key question.
The crypto top Ten index which is an identically weighted index of the Ten largest cryptocurrencies (Bitcoin, Ethereum, Ripple, Litecoin, NEO, Monero, Dash, Iota, ETH Classic, Bitcoin Specie) is shown on the very first chart. The index lost 30% overheen the last Two days. That is meaningful, but at the same time it is no exception. Cryptocurrencies are enormously volatile, so a 30% decline is not necessarily a bad thing … it could become bearish, but it will not necessarily.
Wij look for patterns and trends on this very first chart, and primarily found those rising channels which are annotated ter purple. The chart learns that there are harshly three areas:
- The lower channel is where extreme selling gets fatigued.
- The channel te the middle is a consolidation area.
- The upper channel is where extreme buying gets weary.
It wasgoed no verrassing that prices fell sharply te latest days because they rose up until the upper area of the upper channel. After a parabolic rise it makes sense that some air gets out of an heated market.
Interestingly, today’s correction brought the index to the lower part of the upper channel. So while the fall of 30% sounds scary, and suggests cryptocurrencies are crashing ter a way that a bear market commenced, it is certainly not the case at this ogenblik ter time. It could become worse, but according to the chart presently it is a normal retracement.
Spil long spil this index remains te one of the Three channels it is still te a long term bull market.
The next chart shows the 9 largest cryptocurrencies ter terms of market cap. Wij made annotations on 7 out of the 9 charts, the ones wij deem most relevant.
All of them, with the exception of Iota, are still ter long term uptrends. They have respected their rising patterns, even if each one of them has a different type of pattern.
The point wij attempt to make with thesis charts is that the ongoing correction did not crack any rising pattern. That just confirms the conclusion wij drew from the chart above albeit wij looked at it from a different angle.
So, to reaction the initial question, the 30% crash te cryptocurrencies has not done anything meaningful to the patterns on the chart(s), at least no yet. Ter this type of situation investors better wait to see what happens next. If (a big IF) this correction resumes spil aggressively spil it is doing right now it could get concerning at a certain point. However, if this correction completes anytime soon, and prices stabilize, it would most likely offerande a very interesting entry point. Wij believe that Ripple could become one of the fine outperformers te the next gam up.