Why Has The Crypto Market Turned Bullish? — 10 Jan 2023
Will this be a break-out from the lengthy bear market?
Over the past week, GALA’s gone up 141%, SOL 45%, metaverse-related stocks MANA and SAND both up roughly 30%, and even Cardano (ADA) has increased by ~26%.
So what’s going on here?
This week’s price action has been kickstarted by meme coin ‘investors’ doing what they do best, getting behind a random s&*tcoin and trying to get it ‘to the moon’.
If you’re dying to know, it’s called BONK; there, I said it. No, I would not invest in it.
After this pump, money started going back into BTC with ETH and other altcoins.
Shortly after this, many gaming and metaverse cryptos are simply pumping with a brief yet intense wave of people pouring money in to get a quick 10,20 or even 30x.
Yesterday, all of a sudden, ADA, a top-10 crypto by market cap, started rallying.
Notice the major spike in ADA price (and 24H trading volume in grey) from 29 to nearly 34 cents. Source: CoinMarketCap
What was the specific reason for this? I could not find one, though a tweet and announcement from key Cardano spokesperson and CEO of IOG, Charles Hoskinson, about his new hospital, Hoskinson Health & Wellness Clinic, accepting ADA as a form of payment, could have contributed to this jump.
Will this last, or is it just a bull trap?
I am on the side of those believing that this is just a bull trap and will not be sustained.
I came across an experienced crypto trader, il Capo of Crypto (@CryptoCapo_), sharing his insights into this recent pump. Here is one of his tweets in a recent thread.
Zoom out.
Ask yourself: why am I buying here? Is it because of FOMO? You are seeing random altcoins having random pumps, same as have been happening since the start of the downtrend, and you feel the need to buy. You could think this might be the bottom. pic.twitter.com/HjcZzVG0GI
— il Capo Of Crypto (@CryptoCapo_) January 9, 2023
Yes, the announcement about (slightly lower than expected) US consumer inflation rates from the New York Fed might instil some confidence in the crypto market. However, it is best not to get ahead of ourselves.
The threat of a recession looms across multiple economies worldwide, US inflation is still well above pre-pandemic levels, and interest rates for various economies are trending upwards.
We are still at the bottom, though not far off in the grand scheme of things. Nonetheless, many crypto assets are heavily discounted from their all-time highs (ATHs), and developers behind multiple blockchains are constantly improving their ecosystems, which will benefit their native coins.
Before wrapping up, touching on one metric of technical analysis regarding ETH, the relative strength index (RSI). When it goes beyond 70, it typically indicates being overbought. Conversely, when it falls below 30, it implies an oversold asset.
You will notice how the relationship between the price and RSI for ETH, shown below in this TradingView chart.
To clarify, RSI is only one TA metric used to try and ascertain an asset’s price movements. There are other TA metrics that I have not covered, which I generally omit from my pieces, as I am neither experienced nor even that interested in TA.
However, check out Trading View or your preferred platform if this is important.
Eventually, a massive bull market will be even greater than what we witnessed in the latter part of 2021; it will simply be a matter of time.
None of this is financial advice, and I am not a financial advisor.
This piece contains news and opinions from either myself or the sources mentioned here. Please do sufficient research before investing in any crypto assets, NFTs and any product affiliated with this space.
If you enjoyed this article, I recommend following my Medium page for regular reports about crypto assets, blockchain technology, and more. You can also check out my publication, Crypto Insights AU.
Thanks for your support.