Vital Market Update

By Alex Benfield on May 19, 2021
Author

Wow, days like today can still test the conviction of even the most tried and true crypto investors. 

We’ve taken steps to prepare you for the volatile nature of crypto markets, telling you that corrections as high as 30% and 40% aren’t just common but expected. Not only that, but we’ve actually been waiting for a correction like this to serve as a buying opportunity for what we think will be the next leg up.

However, rarely do these corrections happen so fast. 

In case you haven’t been keeping an eye out, the broad crypto market is seeing a significant correction, with Bitcoin (BTC, Tech/Adoption Grade “A-”) retreating to the $40,000 range and Ethereum (ETH, Tech/Adoption Grade “A-”) trading near $2,787. 

Bitcoin has since seen fierce buying since the lows of this morning, perhaps suggesting a short-term bottom. While there’s still a possibility that it might slip further, the big sell-off has already taken place here today.

Many weak-handed traders and lots of leverage have been shaken out of the market today. This is exactly why we say dips like this are healthy for the market, as now, without those speculative traders and that leverage, Bitcoin can begin to build up healthy price action.

The fundamentals of Bitcoin and the altcoins we cover have not changed. In fact, they’re fresh off the best levels we have ever seen. Adoption is growing as new investors — both retail and institutions — get in.

Remember, cryptocurrencies benefit from a network effect: They become exponentially more valuable as more people start to use them. If the current trends in adoption hold and the upcoming developments help the networks handle more users and more traffic, price will inevitably grow. 

Better yet, Bitcoin has continued to follow almost EXACTLY the same pattern it did during its historic (and parabolic) price explosion of 2017.

Like in 2017, it has doubled in value … and doubled again. 

Like in 2017, it has followed a regular 80-day cycle of shallow corrections.

And, also following the 2017 pattern, after FOUR 80-day cycles (320 days), it has just suffered a sharper correction. 

We will be on the lookout for a solid support level, and if the buying levels of this morning suggest anything, it seems that support level might be $35k.

This likely marks the end of the first bull wave that we have been talking about, and according to our cycles model, the second, potentially larger bull wave will follow. There will likely be sideways trading or range trading in between, but we are still bullish on BTC over the long term.

We hope you HODL. Remember that unrealized losses are just that: unrealized (unless you sell). And if you’re new to the crypto space, view this correction as a buying opportunity. We don’t believe these prices will last long.

Best,

Alex

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