In the last three days, the crypto market added $33 billion to its valuation and the Bitcoin price surged by 18 percent against the U.S. dollar. But, one trader said that a bull run cannot be expected just yet.
Alex Krüger, an economist, a trader, and a technical analyst, said that the cryptocurrency market has simply stopped falling below major support levels and defended the $100 billion support level with high intensity.
Crypto simply stopped falling. Nothing else has changed. No reason to expect a rabid bull run yet. May easily print new lows in the following weeks. A wide range is IMO the most likely scenario to ensue. Nothing to FOMO into.
— Alex Krüger (@krugermacro) December 20, 2018
In the following weeks, the trader explained the market could continue to demonstrate wild volatility in a wide range, unable to initiate a strong mid-term bull run and a long-lasting rally.
Crypto Market Not Ready Just Yet
This week, the cryptocurrency market experienced one of its strongest corrective rallies of the year. Fueled by the increase in the Bitcoin price, several crypto assets like Ethereum (ETH) recorded solid gains in the 20 to 40 percent range while Bitcoin Cash (BCH) doubled its value from around $80 to $167.
However, in the grand scheme of things, the corrective rally on Wednesday has not reversed the mid-term trend of the market. In fact, the crypto market is not even at the price range it demonstrated last month.
In early November, the valuation of the crypto market was relatively stable in the $200 to $220 billion range and the price of Bitcoin was hovering at around $6,500. Since then, at its lowest point, the price of Bitcoin has halved and the valuation of the crypto market fell by 54 percent.
The promising recovery of major crypto assets in the past three days was certainly positive for the short-term trend of the asset as it allowed the market to avoid a further drop below $100 billion. But, Krüger said that it is too early to expect a full trend reversal to occur in the weeks to come.
Crypto bullish talk is increasing. Some are deriding bears looking for lower prices. Most of these bulls lost a fortune, are deeply underwater, and are actually best ignored. Crypto simply stopped falling. Nothing else has changed. No reason to expect a rabid bull run yet. May easily print new lows in the following weeks. A wide range is IMO the most likely scenario to ensue. Nothing to FOMO into.
The best scenario for the crypto market, which has shown some signs of recovery, is a gradual and slow build up across the first quarter of 2019.
A big spike in value can leave an asset class vulnerable to a large drop in the future, especially in a period of high volatility and market uncertainty.
Given the instability in the global market and the tendency of accredited investors to refrain from investing in high-risk, high-return trades amidst market volatility, at least in the short-term, investors in the traditional financial sector are not expected to allocate significant sums of capital into the crypto space.
With no major catalysts on the horizon, for the crypto market to avoid a potential correction, a gradual recovery would be beneficial for the mid-term growth of the sector.