a general partner at Multicoin Capital and the CEO of Civic, believes the crypto market won’t recover any time soon.
The crypto market will rise again, but most likely only when the pain of the recent fall becomes a distant memory. Don’t underestimate the power of psychology in free markets.
Why Crypto Could Take a Long Time to Recover
In 2017, the crypto market saw one of the most intense bull runs in its decade-long history fueled by the sudden emergence of retail traders and individual investors in regions like Japan and South Korea.
At one point, the demand for crypto in South Korea surged to a point in which the premium of the Bitcoin price achieved 20 to 30 percent. When Bitcoin was trading at an all-time high at $19,500 in the U.S. market, it was trading at over $23,000 in South Korea.
At the time, investors of all ages from teenagers to middle-aged employees invested heavily in the cryptocurrency market. Many investors saw their neighbors getting rich off of crypto and could not resist.
Teenagers utilized their parents’ bank accounts without authorization to purchase crypto and many individuals in their 40s that felt stuck in their jobs that pay less than $30,000 per year — the GDP per capita in South Korea is $29,742 — invested in crypto, seeing a glimpse of hope.
Nathaniel Popper, a journalist at The New York Times, reported that Kim Hyon-jeong, a 45-year-old teacher and a single mother, invested $90,000 into cryptocurrencies in the fall of 2017, $25,000 from a loan.
In South Korea, especially in the outskirts of Seoul, teachers are paid on average about $3,000 a month, and with the irrationally high rent costs at the capital, the majority of teachers and government employees are left with less than $1,500 to save on a monthly basis.
As crypto prices plunged, Kim lost most of her money, which may take well over 10 years to recover considering the interest on the bank loan she acquired.
“I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us. I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around,” she said.
Even now, after the fourth largest bear market in the last 10 years, cryptocurrencies are recognized as a sign of hope for millennials that have given up on the idea of obtaining a stable job, earning enough money to purchase a house in Seoul, and getting married due to the declining economy of South Korea.
Regardless of how millennials perceive cryptocurrencies in markets like Japan and South Korea, it could take a long time for retail traders to psychologically recover from the three-month period from November to January of 2018 when prices spiked by well over 200 percent and plunged to extremely low levels.
On average, it has taken the crypto market 62 weeks to recover from major corrections, approximately a year and three months.
But, because of the mainstream media coverage it received and the exposure it gained, crypto could certainly take longer than a year and a quarter to fully recover.
Many people believe that cryptocurrencies represent a revolution of similar or superior importance to other significant events such as the appearance of the Internet. The introduction of Bitcoin (BTC) and its characteristics have enthused thousands of investors and influencers with increasing effusivity.
While some believe that cryptocurrencies will disappear due to their lack of intrinsic value, others like Mike Novogratz think that blockchain technologies, and especially Bitcoin, can surpass gold as the primary means of storing value in the world.
BTC MARKETCAP COULD EASILY HIT 8 TRILLION
In an interview with Anthony Pompliano, Mr. Novogratz explained that in a span of about 20 years, Bitcoin could “easily” increase its marketcap by 100x, if technological and legal developments continue to facilitate its adoption. This would imply that we would be talking about figures close to 8 Trillion dollars in total marketcap for Bitcoin alone in the next two decades:
Gold’s got an $8 trillion market cap, or a $7.5 trillion market cap. And so, we’re 100x off on that. We’re not going to get there in Bitcoin in the next year or two. But over a 20-year period, could that happen? Easily. Easily. And that’s giving zero optionality to all the other stuff. And so I think it seems like a pretty smart portfolio bet
Novogratz has always defended the idea that Bitcoin will start a new Bull run when governments develop more specific regulations that appeal to institutional investors. In this regard, he explains that it is only a matter of time before large capital investors enter the space:
“I know Goldman for instance is gearing up around securities tokens. They’re not doing anything yet, but they’re getting really ready and looking at all the questions on – where would you store them? Do you have to build your own custody, or can you use someone else’s custody? How to get them to work.
Listen, the regulatory framework isn’t there yet on security tokens. We’re working really hard on our security token business and we’ve got, I think, some cool things in the hopper.”
BOW DOWN AND THANK SATOSHI!
Finally, in the climax of the interview, Novogratz’s enthusiasm was such that he even said that people should bow down and thank Satoshi Nakamoto for creating Bitcoin (BTC).
Bitcoin’s current trading range of $3,920–$4,055 could be breached to the downside, as last week’s doji candle created at the key 21- week moving average resistance is signaling bullish exhaustion.
A downside break of the trading range, if confirmed, could yield a sell-off toward the support levels lined up at $3,775 and $3,658.
On the higher side, a UTC close above $4,055 is needed to put the bulls back into the driver’s seat, although that looks unlikely at press time.
Chart signals of bullish exhaustion suggest bitcoin’s (BTC) narrowing trading range could soon be breached to the downside.
The leading cryptocurrency by market value is sidelined below $4,000 for the fourth straight day, and has been restricted to the narrow range of $3,920–$4,055 since March 17, according to Bitstamp data.
More importantly, prices clocked a high and low of $4,055 and $3,920, respectively, last week before closing Sunday (UTC) largely unchanged at $3,970. The price swing formed what’s termed a doji candle on the weekly chart, which is usually taken to represent indecision in the marketplace.
The candle, however, has appeared following a 20 percent rally from lows near $3,300 seen at the end of January. So, it could be argued that the indecision, as represented by the doji, is predominantly among the buyers.
As a result, the probability of BTC ending the ongoing consolidation with a convincing break below $3,920 appears high.
As of writing, BTC is trading at $3,970 on Bitstamp, largely changed on a 24-hour basis.
On the daily chart, the short-term MA studies are now biased toward the bears, with the 5-day MA having dropped below the 10-day MA. Further, with the price well below the March 21 high of $4,055, the bearish outside-reversal candle created on that day is still valid.
So, the sideways channel seen in the 4-hour chart could be breached to the downside in the next day or two.
A range breakdown if confirmed would open the doors for a deeper drop toward $3,658 (Feb. 27 low).
A UTC close well above $4,055 would revive the short-term bullish view and could yield a rally toward $4,200, although gains may be short-lived, as the 21-week MA is still trending south.
Although the world’s most popular cryptocurrency is still trading in its long-established range between $4,000 and $4,100, some analysts believe the moment of truth for Bitcoin is near. What will it be for Bitcoin? $5,500 or $3,000?
Bitcoin has been trading between the $4,000 and $4,100 range for the last 10 days, and today Bitcoin’s trading behaviour was no different. Bitcoin is currently trading at a price of $4,020 while showing a minor loss of -0.24%, according to coinmarketcap.com.
Most analysts are looking at the upper bound of BTC’s current trading range, the $4,200 price mark, which will most likely act as a level of serious resistance again.
However, a Switzerland-based cryptocurrency analyst, who goes by the Twitter handle, Crypto Krillin, recently took to Twitter to state that the moment of truth for Bitcoin is very near. According to the crypto trader, or BTC will fly straight towards the $5,500 price mark, or we will re-visit $3,000.
Read more: Bitcoin or Gold? Or both?
The Swiss cryptocurrency trader is not the only crypto analyst who seems to be convinced that Bitcoin’s upside target currently exists around the $5,500 price mark.
Just a few days ago, Chepicap reported that Galaxy, another popular cryptocurrency analyst on Twitter, explained to his nearly 50k followers that Bitcoin is pointing to a promising potential for the number one cryptocurrency, hinting to an imminent surge of 35% to $5500.
According to Bulkowski's study, more than 60% of ascending triangles with declining volume end up breaking upwards
Despite many analysts reporting optimistic views on Bitcoin’s near-future upward breakout, another widely recognized cryptocurrency trader known to the Twitter community as ‘The Crypto Dog’, recently came forward stating that it is still possible for Bitcoin to drop to $3,500 in the short term, adding that the market conditions haven’t changed over the last several days.
Read more: Bitcoin can surge as high as $400,000
According to crypto technical analyst known as DonAlt, we can only conclude crypto winter is over until Bitcoin crosses the $4,600 threshold and moves towards $5,000 and $6,000.
‘Volume isn’t what will convince me that the bear market is over’, he said. ‘A bullish market structure along with a break of at least $4.6k is. It’s interesting that we’ve had so many altcoin pumps while the general market cap hasn’t really changed. That makes me think there is very little new money coming in.’