Another correction is ongoing in cryptocurrencies. Is there now sufficient reason to be concerned? Is this the crack in the crypto market, and will all hell break loose now?
Interestingly, every time cryptocurrencies correct we get messages from our premium subscribers to our blockchain investing research service asking us questions why the crypto market is correcting, and whether we believe it is tied reason ‘x, y, z.’
Our premium subscribers receive a weekly email alert with all the insights to stay on top of what is happening in the crypto market, and which leading indicators to watch. One of the major leading indicators is the RISK ON sentiment in markets which we even explained in the public domain: Amazing but True: ‘Risk On’ Indicator Turning Bullish as well as Breaking News: Great Stock Bull Market Resumes In 2018. The latter article describes in detail which correlation we see between the stock market and the crypto market.
Even after having written many dozens of time the same insights based on the same leading indicators, continuously repeating that the news is not important (99% of news is noise, just 1% is important) we continue to receive messages asking for the news that is the ‘reason’ for the correction.
Visibly, it is still not clear to many readers how to look at markets. The way to look at markets is to (1) identify leading indicators and their trend (2) follow their path (3) only change direction once the pattern has changed.
As for the crypto market’s correction it is very simple: as long as we are in a RISK ON cycle, i.e. 20-year yields rising and the Russell 2000 going higher, ideally combined with the high beta stocks index rising, there is no reason to be concerned. Moreover, the news is not important, readers should not follow news; it is those indicators that are important.
We are giving away one important chart which, so far, has been shared with premium subscribers. The top 8 crypto index chart on on year shows the pattern in which crypto is moving. As long as this crypto index trades within the green channel there is no reason whatsoever to be concerned. Admittedly, it is now close to the support area of its channel. Given the RISK ON cycle we have identified we are quite confident the uptrend will hold. Chart courtesy: GoldChartsRUs.
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