Even After Weeks of Healthy Profits, Crypto Tokens Fell by At Least 10% For All Coins Within Hours
The summertime dip in the crypto market was short-lived, bringing back the numbers that investors prefer to see over the last few weeks. However, the market seems to have been sucked right back down. Though the market is not experiencing the 70% and up drops it saw last time, the bulls seemed to lose the battles as the whole market fell by a minimum of 10%, which only took a few hours. Altcoins has it the worst, but one analyst seems to believe that there could be a boom again for the subset of crypto tokens, which could be a few months away.
This quick drop happened on Wednesday, and Bitcoin’s price and dominance in the market only confirmed the drastic change, with a 55% loss. Ethereum and Bitcoin Cash came down by about 20% each, with Ethereum pausing at $210 at one point.
The head of research with Fundstrat Global Advisors, Tom Lee, believes that the current capitulation phase that altcoins are stuck in is not that bad. In a Twitter post, Lee said,
“To put the alt-coin sell-off in a historical context: we created an “alt-coin correction index” which measures what % of alt-coins are down 70% from their 9-month high. Recently, this index hit 97%, the highest reading since 10/25/14.”
Tom Lee also called attention to the other readings that Fundstrat’s correction index has recorded, like the “mini altcoin rally” that happened at 87%. In reality, this event was anything but small, as altcoins went up by 270% within 7 weeks.
It is highly unlikely that the same situation would happen twice, but the head of research at Fundstrat said that “this latest downdraft is actually a tactically positive signal for altcoins.” Despite this opinion, many experts believe that this is not an applicable algorithm for predicting bear markets. Typically, Bitcoin has maintained a steady price during bearish trends, even if other tokens fluctuate. It has become the most reliable crypto asset, though Blockstream CSO Samson Mow indicated that maintaining a position for too long with an altcoin tends to yield less revenue over time.
Investors familiar with the crypto world have challenged Lee’s assumptions, saying that his statistics that he employs are typically archaic, at best. Without an updated view of the industry, he may not be a good source of predictions for the upcoming changes for any coin on the market.
Obviously, many investors hope that Lee is right about these chances. They have hope that the “altcoin season” to come, even if it is highly unlikely. As the market works through this drop, Lee’s prediction will soon be deemed correct or completely off.