2017 is an incredible year for cryptocurrencies. Apart from huge price increases there has been lots of volatility.
For traditional investors not familiar with cryptocurrencies it must feel like a huge casino. Nothing is further from the truth. The fact of the matter is that it is important to have a good understanding of why, how and which cryptocurrencies are moving. There is of course an important element of speculation, but much of the price moves in crypto land also make sense. That is why we wrote earlier this year 10 Investment Tips For Cryptocurrencies Investing. As a sidenote, note that our Bitcoin price forecast for 2017 was already met but long term Ethereum price forecast still stands at $1000.
The fundamental question top of mind of (crypto) investors right now is whether cryptocurrencies are bullish or bearish. As usual, many clues are visible on the charts.
Below is the price chart of the top 10 cryptocurrencies (according to their market cap), based on an equal weight. A couple of observations stand out on this chart:
- The sharp drop at 140 points which bottomed last week could be part of a long term uptrend, with a higher low compared to February, March and April. The recent drop hit the same bottom as at the end of May.
- This week’s mini-top could be good or bad news: it could be a lower high (a pattern that started mid-June) or it could be the start of a new uptrend. If things are not clear you need to give the market more time so you get more data, simple as that.
- The drop since mid-June has already significant body, it is much more significant than any other drop this year.
If you are confused by these observation it is fine, because it is also confusing to us. There is no clear trend yet … the only thing that is clear is that more time is needed to determine what’s next.
One of the most encouraging evolutions taking place right now is a rising Bitcoin price. This article explains that a rising Bitcoin to Ethereum ratio is good news because it suggests that Bitcoin’s SegWit could have a bullish outcome. Note, however, that there is no resolution as of yet in Bitcoin world as explained in this article.
We believe it will be clear in maximum two weeks whether cryptocurrencies have started a new upleg (or, stated differently, their bull market continues) as opposed to a medium term bear market has started.