February saw a bit of relief, optimism and positive momentum return to the market. Bitcoin’s monthly close was positive for the first month since July 2018, and the rest of the market also experienced positive monthly gains. Action was consistent with my expectation as described last month’s report – we did see $BTC reach a high of US$4,142.53 on February 23.
This is the first higher high we have been waiting for in anticipation that the bottom is in and a new bull cycle has begun. Another positive indicator has been the beginning of strong break-out returns among select altcoins with Litecoin leading the market. As of today’s date (March 8), $LTC’s 3-month return is at 129.09%.
Another coin, Ravencoin $RVN has returned 207.11% over the past two weeks. Additionally, the market saw a huge surge in Enjin Coin $ENJ on rumor and then confirmed news that its blockchain wallet technology was being used in Samsung’s new crypto-enabled smartphone. As of today, $ENJ has returned 182% in 12 days.
The above described price action, combined with fundamental developments and technical indicators suggest we are turning or have turned. It is hard to over-state the importance of taking positions early and at lows prior to technical breakouts. The market is starting to display bull market characteristics of limited pull backs and consistent strength where taking profits TOO EARLY is a thing. Months of losses can be recouped in mere days.
Positive sentiment has accordingly returned to parts of the community while others remain fearful that recent action is a bull trap. Either way, significant volatility is certainly incoming and I anticipate a big wave of profit taking to occur after the next move up in $BTC and the alts.
It is impossible to know how low a move down from current levels could go on such a sell-off, but I am closely watching for macro events and broader market uncertainty to trigger significant capital flows into the crypto sector. For example, no deal Brexit to be decided next week, China trade talk failure or impasse, hawkish U.S. Fed, rate increase OR further capitulation – either way USD strength leading to hyperinflation or weakness will push capital to alternatives and especially when bonds have a problem, gold, silver and cypto will benefit.
Political instability and military action are also drivers accelerating capital flight into crypto around the world due to national collapse and potential for U.S. intervention in Venezuela on “humanitarian” grounds, North Korea provocation, India/Pakistan conflict escalation – all in MARCH. Based on previous levels of $BTC support a low of $1400 bitcoin is certainly possible, especially if market turmoil triggers an initial “sell everything” response. But I expect the December low to hold.
Total cryptocurrency market capitalization on 2/28 was approximately US$130billion, $BTC dominance was steady at 52%.
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