- The cryptocurrency market continues to be in a state of flux
- Some experts like Willy Woo believe the recent crypto market dip is a temporary pullback
- Comparing Bitcoin’s current 2020-2021 chart with the bull run of 2010-2013 shows significant parallels, with a hint of more upside to come
Experts claim the dip is only temporary
The cryptocurrency market continues to be in a state of flux. This is evidenced by the fact that for the most recent week, bellwether crypto-asset Bitcoin, failed to close at a price higher than the critical 21-week exponential moving average (EMA).
The 21-week EMA is an important line of support when it comes to technical analysis because it’s heavily weighted toward the most recent pricing data points. Closing well below that support level, which was roughly $46,500 as of Sunday May 23, is widely regarded as being a significant bearish signal for Bitcoin – as if the recent 50%+ drop to the low $30,000s U.S. wasn’t enough of a bearish signal.
However, there are cryptocurrency experts who believe the recent collapse of the digital coin category is a temporary pullback that’s necessary before new all-time highs can be achieved.
Legendary angel crypto investor and serial entrepreneur, Willy Woo, recently tweeted that we’re still in a macro bull market:
In the key highlighted portion of the tweet, Woo noted:
Are we in a bull market? Long range macro indicators like NVT Ratio [network value to transaction] are very healthy, that remains unchanged. So yes, this is not a mania top which all BTC bull markets end in, price is BELOW fundamentals, not above it. We are still halfway.
So, Woo believes that the crypto-bull market is taking a breather, and that we’re only midway through the upside cycle. Others agree with him.
More room to run?
Late last week, former Wall Street insider and ex-Goldman-Sachs-hedge-fund-manager-turned-crypto savant, Raoul Pal, who founded Global Macro Investor, shared on his Twitter feed two interesting charts his company assembled that superimposed Bitcoin’s current 2020-2021 bull market chart (white) over the historical chart (light blue) of the Bitcoin bull run for 2010-2013.
Pal also overlaid the current Bitcoin chart (white) with the more recent 2016-2018 Bitcoin bull run chart (light blue).
The overlaid trajectories for both charts show significant parallels that could suggest we’re roughly 50-60% of the way through this current bull cycle, with more upside to come, when compared to the past two cycles. While past performance is not a guarantee of future results, the whole idea behind any kind of technical analysis is to use historical patterns to inform and educate best guesses for future investment and market activity.
Another useful tool that seeks to achieve that same goal – and which also suggests we’re roughly two-thirds through the bull run – is the Crypto Bitcoin Bull Run Index (CBBI). This free resource is a composite index that uses a proprietary algorithm to evaluate 11 different, widely-accepted BTC metrics.
Each input is converted to a percentage-of-certainty, which reflects whether that specific metric correlates with a possible bull market top. Then the 11 inputs are combined into a single analytical model, the actual CBBI, which is a number between 0-100 – where 100 represents that all signals have reached a market top. As of this writing the CBBI, which is updated daily, stands at 63 (see image below) – implying this bull may have more room to run.
The image below shows the percentage of each input across the top and the historical CBBI rating in blue over the historical price of Bitcoin in orange – showing strong correlations over time. Clicking each percentage, takes you to an explanatory page for each individual measurement.
This resource was developed by crypto-investor and subject matter expert, Colin Talks Crypto and his programmer Kamil Monicz. Colin provides an instructional video on how to use the CBBI and its genesis, as well as other commentary to the cryptocurrency community. In a video message posted today, May 23rd, 2021, Colin stated that he believes we’re still in a bull market, otherwise all 11 historical indicators he measures would have to be wrong – which is possible, but highly unlikely.
Out of all 11 charts, the PI Cycle chart is the only one that indicated it could be a top,” he said, “but then again it could be indicating it’s only a subpeak similar to what occurred in 2013. So, we have 10.5-out-of-11 metrics of the CBBI indicating we have not hit the top yet…it’s my opinion that we are hitting a double top situation just as we did in 2013.
On the Flipside
- Always do your own research and realize that both bear and bull experts may provide data which are helpful but should be scrubbed for possible bias.
- While many may be tempted to buy the dip, the saying “You can’t catch a falling knife” holds true.
- On the way down, continue to dollar cost average into the assets of your choice rather than going “all in” at a specific moment because the price could go lower.