The past week brought more selling to the cryptocurrency space for the second week in row. The total market cap of this asset class decreased 19% and is currently 589 billion dollars.
As with any market, nothing goes up forever, nor does anything go down forever. The past few weeks are what one might call shaking the tree. Recall just two weeks ago the total market cap hit a historic high of 820 billion dollars. Now let’s compare that to one year ago. The crypto space had a total value of 17 billion dollars.
So, over the past year, the digital currency space is up roughly 3400%. An extraordinary return. Coming from a Wall St. background, not in my wildest dreams would I have thought a 3400% return was fathomable, but it was, and it was far larger for many who have been invested for more than just one year.
If one were fortunate enough to invest in the right micro cap cryptocurrency last year one may be up 10,000% or even 20,000%. I simply point this out, as jumping into any investment without research or any due diligence is probably not the best method, at least in my opinion.
If an investor makes money because of pure luck, often times that person believes that he or she can repeat and get the same results. This most often times does not happen. I note that in all of these market updates, I simply try and point out facts so that the reader can take no and make his or her own assumptions.
What I have learned in 20 plus years of markets has helped me in this space tremendously. In “dull” markets, when very few people care about an asset, that is when those who have researched can often times buy that item at very low prices. When prices rise in parabolic fashion, many of those who bought before you or I, or the person in between are willing to take some profit.
The past week probably brought a small dose of reality to the crypto market which is needed. Just as many people profited from the rally, there were many on the sidelines waiting for a dip. It seems as if those two met this week, and coins changed hands from those wanted to decrease length and those willing to add or become a new market long.
An interesting trend that was broken was the out-performance of the broader market vs BTC. Bitcoin was down less than the broader market, which was a first for the leader in more than a month. We will see if my theory holds true moving forward, but I am looking for BTC market dominance to decrease on broad based crypto rallies and to increase on selloffs.
The key notes I take from the past week. Whichever coin you are choosing to invest in, look at the chart. Look at the low set this past week, and the past month. If you are a buyer, that low is important, it may be challenged, and may even trade under it briefly, but from a technical perspective any sustained price action under a “major” low is negative.
Look for coins that were up on days where the broader market was down. Look for coins that may have become new leaders. Days with high volume where a major low is set, and then the price turns higher, are very bullish. On the same note, trading an all time high price and then closing negative is very bearish. If you are interested in a coin, take a look at the website. Look at the Discord, check out bitcointalk, reddit, etc. Look at the coin’s Twitter, Facebook, etc.
It is great to ask around and ask other people’s opinions, most do.
Does the coin have a plan ? A vision ? Is there an active community ? Is there progress towards the goals they have set?
These are a few of the things I look for. Whichever coin or coins you decide to invest in, I advise doing a little research on them.
As always, I will include some charts I follow. Total Market Cap, BTC, LTC, DOGE and PAC.