The crypto market made recovery on Monday as the world’s leading digital asset climbed to $8,920 and altcoins surged much harder. But today, prices yet again dropped and bitcoin is now hovering around $8,700.
These gains came after Bitcoin lost 16% of its value last week. The sell-off happened the same week the stock market crashed, in the worst week decline since the 2008 financial crisis. However, the correction in the crypto market was “extremely mild” in comparison.
According to Weiss Crypto Ratings’ Juan Villaverde, the retracement made by the cryptocurrencies was actually “right in line with what our timing models had been anticipating all along, even before investors began to worry about a pandemic.”
The Dow Jones Industrial Average had its worst one-day drop ever as well and the US stock market lost trillions of dollars last week but “it was reassuring to see crypto markets so calm and normal.” Cryptos performed very much like any other week, recording a normal correction.
Overall, crypto assets are trading more in line with the traditional safe haven gold that lost 4.5% of its value on Friday, in the worst drop since 2003, than like risk-on assets said Weiss Ratings.
If we take a look at the Weiss’ crypto Index, it fell by 9.18% while the “supposedly” far more “stable” S&P 500 dropped by about double of this. The index sans bitcoin presented a similar picture, the altcoins were down 11.11%.
Weiss Crypto Ratings’ large-cap crypto index was down only 8.46% while mid-cap crypto index fell 12.85% and the small-cap index went down by 9.33%.
Usually, small caps are the ones that fell much harder but this time they held up relatively well. The fact that they are trading in line with the broad crypto market could mean “the selloff is likely not done yet.”
“It’s only after we see capitulation on the most speculative names that we can confidently call for a bottom,” said Weiss Ratings.
In 2020, we saw altcoins doubling in price, this strength suggests once these cryptocurrencies work off their “temporary overbought conditions,” we would end up experiencing a much larger correction.
“Our timing models indicate an important low, is likely by mid-March,” said Villaverde but after this low we could see yet “another massive bull run for Bitcoin.”