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Analysis of the cryptocurrency market
When analyzing the global cryptocurrency market, the finding is unequivocal. Indeed, the market cap fell sharply. It went from more than 2000 billion to 1300 billion. But today the market capitalization exceeds 1500 billion at the time of this writing.
What is interesting is that indeed, if we analyze the long term, starting from 2019, we see that we have fallen a little bit, more or less, to the level at the end of February at the beginning of March. So there is no danger in delay. However, this had a big impact on the cryptocurrency market, as many market caps melted like “snow in the sun”.
A lot of people have lost money in the last few days. It is a clear and precise certainty. If we exclude Bitcoin, it’s even more impressive, we see that the fall is even more violent. This article is a brief analysis of the cryptocurrency market.
The gradual rise in the price of Bitcoin
Indeed, Bitcoin is recovering from the hair of the beast compared to the altcoins which are on the cryptocurrency market. This means that the altcoin season is reversing. Is it sustainable? We do not know yet. There is not enough data yet. We will have to wait a few more days, but in any case, there is a real movement in the cryptocurrency market.
Indeed, dominance is expressed as a percentage. This is the level at which Bitcoin sits relative to other digital assets. We were down to less than 40% on May 17, but today we are over 47%. So bitcoin is picking up the slack.
But, when there is a Bitcoin crash, all other digital assets follow the trend. If we go a little more into the details of this famous dark week, a lot of things happened. As you know, we went down to 30,000 USD and we went up a little bit since then. Fortunately there today it is stabilizing.
The different perspectives
It is difficult to accurately predict the behavior of the cryptocurrency market, however, several things are possible:
The first is that investment funds, particularly cryptos, have decided to reposition themselves on large capitalizations, on safe values according to them, i.e. Bitcoin, Ethereum and everything related. à la ”DeFi”.
The second important point relates to what are called weak hands or “fragile hands” in French. Indeed, these are people who are often short-termists. People who buy and who do not necessarily know what they are doing. They buy and sell quickly on the market. There has been a very significant drop in the number of different addresses of people with bitcoins. In less than a month, we have gone from 5.06 million to 4.37 million, a loss of almost 700 miles. It’s still quite impressive.
But the second data that I found very interesting is mainly that people who have owned subdivisions of bitcoins for more than a year continue to supply them regularly. As you can see, we are now at 21.80 million to 21.93 million. So people who are rather long-term continue to believe it. Better, they do not sell en masse, even if there has been profit taking.
An optimistic scenario
Cathie Wood still sees bitcoin at $500,000. So people might ask, but what is she talking about? You have to understand that she is speaking in the long term of course, she is not saying that tomorrow morning Bitcoin will be at 500,000 USD. We can give him partial reason for a simple reason.
If we really believe in this technology, maybe one day we will be 100 miles, two hundred thousand, five hundred thousand, it’s quite possible. I remember a few years ago when people were saying we were going to have $50,000 bitcoin one day, everyone was laughing at them, very clearly.
By the way, I had made a tweet at a time when I had a fight in 2017, 2018 with someone who said that Bitcoin was soon going to cost zero. I told him with a laugh we’ll meet again when it costs 50,000 USD. I dug up this tweet recently, it was very funny.
That doesn’t mean it’s going to happen. Nobody has a crystal ball. Maybe Bitcoin will never be at 500,000 euros. But in any case, Cathie Wood is the boss of Ark Investment Management. It is a fund that invests heavily in the cryptocurrency market.
Indeed, for her the fundamentals have not changed. Bitcoin is still a solid cryptocurrency that has real fundamentals with a real base. Therefore, it is not because we have had major and violent falls lately that this changes the fundamental. She also explained that the environmental problems associated with Bitcoin mining were partly solved with the adoption of solar energy.
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This text does not constitute investment advice. Do your own research and only invest the money you can afford to lose.
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If you want to learn more about Bitcoin and investing in cryptocurrencies, here are two perfect books: “Understanding Bitcoin in 2 hours” and “Investing in Bitcoin”.
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