Billionaire investor and hedge fund legend Mike Novogratz could be right after all. Since he called a bottom in the crypto market on September 13, the market has notably recovered, fueled by large rallies of most major cryptocurrencies.
Since September 13, within less than three weeks, the cryptocurrency market has recorded a major movement on the upside. Ethereum (ETH), which struggled to see a recovery in its momentum throughout August, recorded a 24.44 percent increase in value while Ripple (XRP) saw a staggering 105% surge in price.
Why Did Novogratz Call a Bottom?
Earlier this month, as Ethereum dipped below the $200 mark after suffering a 45 percent drop the previous month and other major cryptocurrencies also struggled to demonstrate any momentum, various technical indicators showed massively oversold conditions.
“I think we put in a low yesterday. retouched the highs of late last year and the point of acceleration that led to the massive rally/bubble. Markets like to retrace to the breakout. We retraced the whole of the bubble,” Novogratz said, calling a bottom in the market.
Williams %R, better known as Williams Percent Range, a technical analysis oscillator that shows the current closing price in relation to the high and low of the past N days, also showed oversold conditions in the crypto market, as Bitcoin dropped below the $6,000 mark.
Referring to the oversold conditions in the cryptocurrency market demonstrated by technical indicators, Novogratz said that the market has experienced seller fatigue and with less investors willing to sell in the current low price range, it is unlikely for the market to drop any further.
In a period like this, it is highly risky to engage in short and long contracts, because the market is showing volatility in its low price range. Yesterday, on September 27, CCN reported that Scott Nations, the president and chief investment officer of NationsShares, a division of Fortress Trading, shorted Bitcoin live on CNBC at $6,375, with stop loss set at $6,600.
Today, the Bitcoin price surpassed $6,770, breaking out of the $6,600 stop loss, which means that Nations lost out largely on his trade.
“I want to be a seller of the October contract. The Cboe Bitcoin futures, that is a single Bitcoin in a futures contract. My targeted downside is $5,950 and my stop to the upside is $6,600. Why do I want to short? Because it is Bitcoin. It has no fundamental value. We’re in an unravelling of this collosal bubble and the only thing going for it is hope, and hope is a horrible strategy,” Scott said.
Where is Market Heading?
Novogratz, who has been accurate in his calls throughout this month, emphasized that $6,800 is a major resistance level for Bitcoin and if the dominant cryptocurrency breaks out of it, a move to $7,000 is very likely.
It is still too early to determine if Bitcoin can enter the $7,000 region in the next 12 to 24 hours but based on the rrend of the market and strong momentum showed by major cryptocurrencies, it is becoming increasingly likely that a short-term rally will occur.
Featured image from YouTube/Bloomberg.