If the past is any indication, the blood bath in the altcoin markets may soon see some relief.
According to research published by Tom Lee of Fundstat Global Advisors, we may be close to the end of the altcoin bear market.
At the very least, we could be close to a relief rally.
Fundstrat created what they call the "Altcoin Correction Index".
The Index measures the percent of altcoins down 70% or more from their 9-month highs.
Back in 2014, at the height of the bear market, that Index hit 87%, which was the highest reading ever at the time.
Curious what that reading might be currently?
87% may sound high, and it was, but currently the Altcoin Correction Index is spitting out a mind boggling 97%!
Which would be the highest reading ever.
(Source: ~~~ embed:1037747744302096384) twitter metadata:ZnVuZHN0cmF0fHxodHRwczovL3R3aXR0ZXIuY29tL2Z1bmRzdHJhdC9zdGF0dXMvMTAzNzc0Nzc0NDMwMjA5NjM4NCl8 ~~~
As you likely already know, we are reaching historic levels of bearishness for the altcoin markets.
Roughly 97% of altcoins are now down over 70% from their 9 month highs.
Ouch!
What does this mean going forward?
Ok, so we know that altcoins are down bigly, but what does this mean for future prices?
Well, the last time the altcoin markets were this bearish we saw roughly a 3X return over the following 2 months.
Check it out:
(Source: ~~~ embed:1037747746025943040) twitter metadata:ZnVuZHN0cmF0fHxodHRwczovL3R3aXR0ZXIuY29tL2Z1bmRzdHJhdC9zdGF0dXMvMTAzNzc0Nzc0NjAyNTk0MzA0MCl8 ~~~
As you can see, after the Index peaked in 2014, prices saw roughly a 3X return over the next 7 weeks.
Will history repeat?
We can't really say for sure, but the setup is certainly there.
Fundstrat even mentioned that, saying:
"While we recommend sticking with bitcoin, the alt-coin correction index does seem to suggest this latest downdraft is actually a tactically positive signal for alt-coins."
(Source: ~~~ embed:1037747748261511168) twitter metadata:ZnVuZHN0cmF0fHxodHRwczovL3R3aXR0ZXIuY29tL2Z1bmRzdHJhdC9zdGF0dXMvMTAzNzc0Nzc0ODI2MTUxMTE2OCl8 ~~~
Which sounds like a nice way of saying, we still like bitcoin too, but buy altcoins now if you want to make some money in the next few months.
Stay informed my friends.
Image Source:
https://medium.com/@jimmysong/why-bitcoin-is-different-than-other-cryptocurrencies-e16b17d48b94
Follow me: @jrcornel
Me likey Rally 👍😁👍
They have been few and far between for the last 9 months.
The dip is where the money is made, Its good to power up at that price!
There is probably a lot of truth to that...
I think the most people are expecting history to repeat itself. I certainly hope that it does. However I read an article by Vitalik Buterin this morning in which he stated that there's no possible way the cryptocurrencies will go up another thousand times like they did last year.
I'd be willing to take 100 times though.
Yea he is probably right. Though 10X is certainly possible and maybe 100X on some, like you mentioned.
In 2014, I am sure that we didnt have so much investors & analysts interested in these coins, this time ROI can be even more than 3x, lets see ;)
Kinda my thoughts as well. Investors have a much easier time buying altcoins than they did back in 2014. Should help them move even easier when they start running.
Interesting analysis. It certainly feels that way too. They are definitely due for a very nice relief rally for sure.
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I know things were bearish, but that is pretty ridiculous.
Agreed. I know back in the day it was BTC that moved first then alts followed similar to now but yeah it is pretty crazy right now. This bear market feels worse for some reason.
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Well hopefully much of the bear market is about over.
We’re close man
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Holding steem from the past 7 month.
Hasn't been very fun has it?
Definitely, on the daily basis, Hell fun.
I think this makes a lot of sense since it really does not make sense that bitcoin is worth over $100 billion in market cap while the sum of all the other which are over 1,800 right now are below that figure. While I admit that bitcoin is the king of cryptocurrencies and the leader going forward to the adoption in the space, it is not the asset that will create the most value as we see protocols that are truly innovating like our very own STEEM. The only feedback I will have with this comparison is to be careful as there have been many failed projects that are now worthless and are included in this analysis.
Correct, and it doesn't take very much money to move a lot of these coins, at least in comparison to bitcoin. If just $1 billion left bitcoin and went into steem, we would see 10X in the price. That would represent less than 1% of bitcoin's market cap.
Thanks for your thoughts about the current situation in the cryptocurrency market again @jrcornel and Steem on!
You got it. If history repeats, the bear market in steem is close to being over.
Very interesting analysis but I don’t think we going close to end I strongly believe that this is the future
I’m thinking we need a huge capitulation that’s coming first. November seems the time to load up but what do I know haha
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November and December are traditionally very strong months for crypto, so you know something. :)
The question I'd really like answered is this:
Will the ERC-20 projects that panic sold come back into the market or will they accept their losses?
If they don't come back that's a lot of ETH supply pushing the market down. I think they've learned not to gamble with their seed money... I don't expect them to return... but then again... the new ICOs will probably make the same mistakes.
Well I assume most had to sell in order to fund their projects. Cant afford to get nothing from your ICO. So no I don't think they will be coming back unless they are raising more money.
My understanding is that they sold to make sure an Ethereum crash wouldn't remove their runway out from under them. These projects still have a lot of runway to gamble with, especially if they sold at $400 and not $200. I wonder how many will take the bet or just call it good.
I think most are being forced to sell, the ones that didn't already anyways. If they raised $30 million to build out their project, but it was all priced in Ether, they have to sell to try and preserve some of that capital before it all goes away. Otherwise their project will not launch.
what goes down must come up. buy hodl
I hope it works like that.
I hope it to be true, however I feel the SEC is likely to reject the BTC ETF sometime this month sending us to new lows before we move up again.
Rejection or postpone? The fact they are reviewing previous rejections is somewhat surprising.
Hope you are right!
The "Altcoin Correction Index" is a good indicator of how altcoins react in the market today and that's useful.
Hopefully it is. It doesn't have a lot of data to go off of. Things are too new still.
crucial time in crypto for sure holding is hard but one has to keep the faith