The crypto market is right in the middle of a major volatility. Indeed, upheavals are not new in the crypto market but many analysts think this is perhaps the most significant upheaval since the start of cryptocurrency trading.
Last December, the crypto market was sent into a tailspin, with the market losing more than 30% as prices crashed from an all time of high of more than $19,000 to less than $11,000. Then came what appeared to be a much needed price rally in which the total market capitalization moved from $250 billion up to $480 billion.
But just when it seemed like the good times maybe finally here again, the market capitalization fell back to $366 billion, leaving many investors scrambling to make sense of the situation.
Sharing his thoughts about the price plunge, hedge fund manager and leading crypto analyst Teeka Tiwari says the latest fall may in fact portent a new era of growth and unprecedented prices for cryptocurrencies.
Tiwari draws parallels between the crypto market and the Nasdaq Composite Index of the early 1990’s. He explains that the latest fall in price is due to the Sell Off of crypto assets as a number of investors looked to cash in on a recent value appreciation.
“What you’re seeing is a natural progressive move when an asset price goes up after being heavily sold off. What happens is you get that initial rush, you come into a little bit of a resistance area where people own it higher… and people start thinking, ‘Oh, this thing has really moved a lot. I don’t know how long this is going to last, and I’m still underwater. Let me at least get something out of this.’ They start selling, and they start selling, and they sell it off,” he said.
He recalled that in October of 1990, the Nasdaq bottomed at $327.55 and then had a massive rally that took it back up to $378, a 15% leap from the bottom. According to him, tech stocks soon suffered another plunge in what is known as a “50% retracement” as some investors looked to cash out in hurry. But following their exit, the Nasdaq market took a vertical leap moving from $353 to $480.
“Once everybody that was going to sell is out, the market just goes vertical. A lot of the Nervous Nellies will get out. And then, once they’re out—once that overhead resistance is taken out—this thing shoots up.”
Tiwari also cautions against nervously monitoring the hourly or daily movement of crypto prices, describing it as a terrible waste of mental resources.
For the love of your own sanity, please don’t sit in front of the screen all day long dying tick for tick,” he said.