It is no secret we are bullish Cryptos for the long-term. People all over the world are looking for an alternative to their local currencies whose value is inflated away over time. Furthermore, they seem to like the low cost of transactions.
The charge for sending purchasing power across the world is the same as sending it across the street. Anyone who has used Western Union knows that cryptos are a far lower alternative. So far the big use cases are for cryptos to be used as currencies and this is why we have focused on the blue chips of the cryptocurrencies.
We have been doing a lot of research on many of the utility tokens. These are essentially frequent flyer miles one uses to buy and sell goods and services within a particular ecosystem. Some to these token will become quite valuable, most will wither away. In time, we will do some writeups on tokens that we think have a chance of succeeding.
Furthermore, we are finding that other methods that allow a distributed ledger to come to a consensus in ways that are faster and even more secure than the current technology. So we are on the lookout the possibility of another technology upending bitcoin and the other established alternative cryptos. We will be writing about that as well.
But let’s get to why we are writing today. We believe that buy and hold will be a profitable strategy in the years ahead. But we should expect volatility to be high for years to come as well. What we have seen since the recent bottom in late December is typical of what we should expect going forward.
The chart above is a price chart of the CCI30 Index. This is an index of the 30 largest cryptocurrencies and tokens by market value. Since the top, the CCI30 has fallen in a very complex correction that took the index down from about $22,200 to $1,800 for a drop of 92%. Since a bottom was put in in December of last year, prices have risen in an impulsive fashion.
The crypto market got cl0cked the past few days as many of the popular cryptos have fallen around 30% or so. Bitcoin, for example, peaked at 13,800 and fell to $10,400 before bouncing to its current level of 10,900. Our interpretation of the Elliott waves that the CCI30 index is tracing out looks fairly clear to us. Wave 3 peaked a couple of days ago and cryptos are now in a corrective mode. This should not surprise anyone as the price of cryptos as getting a bit frothy. We think that the typical crypto can fall as much as 3o% more before we get another move higher. So expect some wild swings over the next couple of months.
Once complete, this will not be the end of it. This analysis suggests and an even bigger sell-off will be in the cards after we get one more down up sequence. If this scenario plays out, we will see a bottom in 6 to 9 months and it will present with the buy of a lifetime. There is a more immediate bearish scenario. Wave 5 may have ended 2 days ago. If this is the case, we are about to witness a brutal sell0 sooner rather than later. However, we have to be aware that other scenarios may play out. It is entirely possible that the price of cryptos will continue to chop higher. This is a common trading pattern in bull markets.
This might seem like on the one and on the other hand analysis. It is always important to think about the possibilities, and then trade the probabilities. Our money is currently on the volatile bearish side of the ledger. But we have to always remember that predictions are tricky affairs, particularly when it concerns the future. This is why we keep trend following techniques front and center. If and when the market participants tip their hand, we want to be on our toes so we can jump on board.
Since we are in this for the long hall, we are not going to try to trade the wiggles. If you want to We will leave that to the readers should they choose to do so. Instead, we suggest people dollar cost average over the next few years. We do recommend people diversify amongst the various cryptos and token and this is where we plan to continue our discussion over the years ahead. So do not expect us to have an article all the time on this new and important asset class. We plan on writing articles every 2 or 3 weeks as we see something that should be brought to your attention.
Image Source Angie, Pexels.Com
Mark is long a number of different cryptos.
