The cryptocurrency correction that started in January and extended to February moved a lot of money out of the market, or so it seemed for a minute there as Bitcoin plunged below $7,000. A lot of day traders got decimated, individual investors were terrified, and the HOLD crew – well they were all yelling HODL!
Then last week came and Bitcoin crept back up breaking the $10,000 mark, a point many people could take months or more to reach. Both Litecoin and Ripple saw incredibly strong weekly growth at 52% and 46% respectively.
Here’s a look at the top ten cryptocurrencies as of publishing this post at 10:00PM PST on Thursday February 15th.
(Source – CoinMarketCap.com)
If you take a look at the seven day price charts to the right of each cryptocurrency you’ll see pretty solid growth across-the-board. When this happens many people report on the specific good news that moved each cryptocurrency:
“After Ripple’s (XRP) announcement yesterday, Feb. 14, that they are partnering with the Saudi Arabian Monetary Authority for a pilot program for cross-border payments, the price rose from its Feb. 14 intraday low of $1.02 to $1.15.” (Source – CoinTelegraph)
While I do think the Feb 14th announcement helped Ripple, the only reason it even made it up over a dollar is because Bitcoin recovered bringing all the altcoins it had taken with it, back up. Right now we’re living at a time where the price of Bitcoin has a massive impact on altcoins, so when Bitcoin is down, so is everyone else and the recoveries work in mysterious ways.
The question now is if we’ve established a new base and started a bull run, or if this is what investors call a dead cat bounce:
“A dead cat bounce is a temporary recovery from a prolonged decline or a bear market that is followed by the continuation of the downtrend. The name “dead cat bounce” is based on the notion that even a dead cat will bounce if it falls far enough and fast enough.” (Source – Investopedia)
There’s really no way to tell until we let the next few weeks play out. The cryptocurrency markets are incredibly volatile which means trying to predict them, even using fancy technical analysis, often doesn’t really apply. Still, the overall concept of a dead cat bounce is one that does likely apply overall – if we’re still in a bear market, which we could very well be, then quick jumps up could easily be followed by sharp drops back down.
At the same time, what has so many people fascinated by cryptocurrencies is the fact that Bitcoin could be $15,000, heck if could be $19,000 and that would be entirely possible. Of course the opposite could happen and Bitcoin could drop to $5,000 or less – that’s also entirely possible. As I’ve said many times before, I’m bullish on a number of cryptocurrencies (BTC, ETH, and LTC are my three favorites), but over a multi-year time period. In the short term I can see the market rising and falling, then rising again, and falling again.
What I think is going to be interesting to watch is how the rest of February goes. There’s a lot of people speculating this is the beginning of a bull run, that would be fun to watch, but like I said, the exact opposite could happen and I don’t think anyone should be surprised.
So I’ll ask you what you think since I’m stumped. What is the second half of February going to look like?