Markets

The State of the Crypto Market

The cryptocurrency market seems to have settled down, after its 25% jump earlier this month. What happened still is not fully clear; theories range from a sudden influx of stablecoins boosting the overall market to a massive, and anonymous, single-user purchase of Bitcoin starting a buying spiral. Whatever the cause, the effect was plain. The cryptocurrency market cap spiked from $147 billion to $185 and is still elevated. The market cap chart from Coinwatch.com shows it clearly:

The most important point might not be the jump in value, however, but the plateau that has formed since. Cryptos are holding at their new, higher level, and some analysts see this as a “new normal” for the sector. In the words of Mati Greenspan, from eToro, “The most likely scenario is that we now create a new range, or even, hopefully, a sustained stabilization … The market is clearly still excited.”

A Closer Look at the Coins

The picture mostly holds as we move down to look at individual coins. Bitcoin (BTC), which currently holds a 52% share of the total crypto market cap, shows the same pattern in its 3-month chart as the larger market:

The sudden jump is clear, as is the plateau that followed. But there is a story underneath. Take a closer look at the trading volumes, leading up to and since the price spike:

The drop-off in trading volume since April 11, back toward pre-spike levels, despite a modest gain in price during the same time, would suggest that traders’ interest is waning – or at least, that the “opportunity” traders have been weeded out, and the activity is centered once again on crypto’s long-term audience.

Bitcoin is not alone in retaining gains. Ethereum (ETH), the third largest coin by market cap, with a 10% share, is still trading $20 above its pre-surge level. This is despite an 11% slip since the coin’s April 8 peak. Again, the chart illustrates the moves, and the recent drop in trading volumes:

A Bullish Future?

Speaking from Fundstrat Global, which he co-founded and where he heads up research, the famously bullish Tom Lee sees investors developing an appetite for Bitcoin risk. He says, “If the S&P 500 made a 2.5 standard deviation move [which it has this year] and investors are looking for volatility, that’s building a base case for bitcoin.”

The case Lee sees is BTC $10,000 by the end of this year.

Now, Lee has a history of making spectacular predictions – and is sometimes seen as making them to get attention. In the extraordinary BTC surge in 2H17, Lee predicted that the cryptocoin would hit $25,000. And we all know how well that turned out.

But he is not alone in taking a bullish stance on BTC, or on crypto generally. Plenty of big names in the industry are taking, or doubling down on, positions as crypto bulls.

John McAfee, he of the infamous “Bitcoin bet,” is still publicly backing his prediction that Bitcoin will hit $1,000,000 before the end of 2020. On an amusing note, McAfee is now engaged in a Twitter argument over whether or not “Dec 31, 2020” is a hard date, or if he will still win the bet if Bitcoin reaches his target before that.

Also optimistic is eToro CEO Yoni Assia. Earlier this year, he said, “It’s hard to say for sure whether we are going to see next bull run in 2019, or if, as some are saying in the market, that 2020 will be the next haven for cryptocurrencies.” Events this month would seem to have answered him, as traders and market watchers have generally accepted that crypto is entering a new bull run now.

The most bullish stance on crypto right now, however, is likely that of Kraken CEO Jesse Powell. Powell sees the market entering “accelerated growth,” and hitting a new market cap of $1 trillion. Given that the entire cryptocurrency market currently stands at $172.92 billion, and at its peak – back in December 2017 – hit $800 billion, Powell’s forecast may be a little too bullish.

One thing is certain, however: the cryptocurrency markets are providing plenty of fodder for both bulls and bears.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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