‘Emotional’ Bitcoin Bulls are ‘Grasping At Straws’, Claims Bloomberg Analyst
A Bloomberg analyst has claimed bitcoin bulls over the past week are too extreme with their emotional enthusiasm. | Source: Shutterstock
A recent article in Bloomberg paints a less optimistic future of the crypto markets than you might typically find this week.
Vildana Hajric reports that the GTI Global Strength Indicator of the Bloomberg Crypto Index, which tracks significant cryptos, has the same trends which led to its previous peak in January 2018. The index (and the price of major cryptocurrencies like Bitcoin and Ethereum) dropped over 65% after that.
Analyst Calls Bullsh** on April Fool’s Day Run
According to analyst Mike McGlone, the current “bull” trend is suspicious at its very best. He says that exchange volumes and transactions aren’t what we should expect in a bull market.
A highly speculative market rallying on declining volume is not healthy. Typically you need good, strong volume and transactions to indicate an enduring trend. Bulls appear to be grasping at straws or what best fits their more emotional less rational views, positions. The emotional enthusiasm the past week appears too extreme.
The Bitcoin price has risen more than $1,000 since April 1st. The April Fool’s Day run, we might call it in historical terms, no one’s overly sure what sparked the rally. Before that, Bitcoin had traded within several tight ranges, all the way down into the high $2,000s at some points, for months. Bulls have seized the opportunity to celebrate on social media, and the price of other major cryptos have experienced corresponding gains, or, in the case of Bitcoin Cash and Litecoin, seized much more substantial percentage gains.
“Emotional enthusiasm” is one way to put it. Fear of missing out (FOMO) is probably another driving force in the buy orders placed over the past nine days. People who had been waiting for lower prices were likely spurred into action when they saw the Bitcoin price take off out of nowhere. Bitcoin shorts were high in the middle of March, but obviously, millions in short calls were liquidated when the bulls took off.
60+% Drop Incoming?
According to CoinMarketCap.com, total volume in the Bitcoin market over the past 24 hours at press time was just over $13 billion. On March 13th, it was close to $10 billion. However, during the most bullish month on record, January 2018, when Bitcoin eventually reached a crescendo of nearly $20,000 across most markets, volume ranged from $11 billion to over $23 billion. Volumes were higher as the price began to drop, for obvious reasons.
There are even more markets now. The addition of stablecoin markets should contribute to increased trading figures.
The report may be a sobering warning to those who are expecting loads of new money to enter the market and float the unit price higher and higher. However, the resistance to fantastic run-ups and the realistic nature of the gains may be an indicator of a healthy market.
Or, as McGlone suggests, the technical indicators could be on the nose: we’ll be entering a sell-off before the bulls know what hit them. If that sell-off is anything like the last time the same technical indicator was applied, it could mean a drop to the mid or low $2,000 level for Bitcoin, with corresponding drops across most of the top 10.
