The past week brought profit taking in many asset classes, led by US equities and many of the NASDAQ leaders. The NASDAQ was down 6%, Interest rates in both US Treasuries were slightly lower, Gold was also down a few dollars and the digital commodity market shaved 9% led by Bitcoin.
The digital asset total market valuation now sits at 274 billion dollars. The 270 – 300 billion dollar mark has been a very important support level dating back to November of 2017. It seems that whatever I read regarding cryptocurrency one person is calling for $100,000 BTC while another says its going to zero. Having been in markets for the better part of two decades now, I would say both of those scenarios are not very likely and after years of massive gains the digital commodity space is maturing and appears to be setting up for some major consolidation. The low set on Easter Sunday of 242 billion is a multi month low, and since then the market has rallied 13% in less than 24 hours. This will be the new level of importance on the downside, while the 340 bb area will likely pose some resistance to the upside.
Another common question I have been asked my friends and associates recently is how much will LTC, $PAC and DOGE coin be later this year? I wish I could tell them, but I can not see the future. Nothing goes up forever, nor does anything go down forever. For the large majority of 2017, especially November and December, my market updates were generally about how it was another new high for this coin, that coin and the whole market in general. People were making millions and some even billions of dollars in a few months time. It seemed as if everyone I spoke to wanted to turn $1,000 into $1,000,000 overnite.
Last summer, a friend and I spoke and we would put a couple dollars into coinbase every so often, but it would take 3-5 days for the coin to hit my account while the funds were transferred out of US Dollars in seconds. Well as luck would have it, LTC was up 50% and 100% in those waiting periods, and it was fine and dandy, how could one complain. Now, if it was in a declining market, I would probably have had a different vibe about the situation. But, I read the disclosure, I saw that it would take 3-5 days to receive my coins, as soon as I clicked the mouse, I took risk.
If one want an outsized return, they take risk. You can put some cash in a safe or vault somewhere, and will not get any yield, but you have a near perfect chance of having all your capital intact. When something seems like easy money, more and more people begin to do it, driving prices up, competition up and volatility up as well.
I learned many years ago that the majority of my time with any investment would be spent developing a strategy, doing some research, calculating different scenarios. Left clicking on the mouse button, after reading something on some social media or chat site was not one of them.
If you liked an asset at a higher price and it has come down, ask yourself what changed? Was it an interior factor or exterior factor. With Bitcoin still be the predominant currency pair in the crypto sphere, as Bitcoin goes, so will the rest of the market for the great majority of the time. Hence with Bitcoin down more than 60% from all time highs, and it being such a heavyweight in the asset class, it makes it more difficult to remove the exterior factor from the individual crypto currencies. That said over the past week, BTC market share was flat over the past week and remained at 45%.
Below are four charts. Total Digital Commodity Market Cap, Bitcoin, Dogecoin, and $PAC. If I covered the names, they all look very similar and should help illustrate my point when one is in a market where nearly half of the asset class valuation in held within one entity.