The crypto markets collectively lost ~$1.2Tn in the space of a couple weeks leading to the largest retracement in 2021 valuations and potentially the best opportunities historically speaking to buy.
Is the Bull Market over?
Whilst what we have just witnessed was quite extraordinary in terms of draw down with bitcoin falling 53% and Litecoin 64% respectively, this activity appears to have been triggered by newer larger market participants panic selling in reaction to tweets made by Elon Musk suggesting Tesla isn’t so hot on bitcoin and may sell its holdings. A cascade of coins flooded back into the market causing a chain reaction and self fulfilling prophecy as more investors saw their profits threatened. That panic which had been contained to just bitcoin quickly spread. Musk has since come forward to reassure everyone that Tesla will not be selling and plans to hold its position with diamond hands. Taking into consideration the context of the move, it appears more likely than not that the market is still overall bullish but may take some time to shake regain confidence, which some of these larger investors are experiencing for the first time. On-chain data analyst, Willy Woo, is confident there is still room to run, according to fundamental user and capital activity on the networks jokingly stating:
“The Bull market is not over yet. But I have to tweet quick because my boss here at McDonalds is very strict on coffee breaks.”
Cathie Wood, CEO of Ark invest a major early investor and believer in both Bitcoin and Tesla remains unperturbed calling this activity capitulation, stating in an interview with Bloomberg business week
“We were looking at all the indicators this morning, they are all suggesting we are in the capitulation phase which is a really great time to buy, no matter what the asset is, a capitulation phase is ‘buy’, its on sale.”
From a technical standpoint Litecoin is grossly oversold and historically falls of this magnitude have lead to reversal gains of 20-40% the day after as markets attempt to find equilibrium.