Sun. Aug 7th, 2022

No consensus on whether Bitcoin moves higher or lower

If you pay attention to cryptocurrency news on a day to day basis, one of the common themes you will see is reports that almost always follow the same predictions. When Bitcoin moves higher, almost all news reports cite analysts and experts who say Bitcoin will keep moving higher. When Bitcoin moves lower, almost all news reports cite analysts and experts who say Bitcoin will move lower and even collapse. Since around the Christmas holiday, there has been a marked increase in the divergence of news articles reporting the direction of Bitcoin’s price. A great example of this occurred yesterday (December 29th, 2019) when cointelegraph reported that Bitcoin could rally to $9k while today they reported that Bitcoin was likely to revisit the $6k value area. Newsbtc also reports that the cryptocurrency market will find a new uptrend after the altcoin market completed a two-year-long bear market.

 

Altcoin market remains bearish

I want to show you three charts from the great analysis service Weiss Ratings (I am a subscriber of their cryptocurrency service). Weiss Ratings has several cryptocurrency indexes that they’ve formed ranging from PoW (Proof-of-Work) index to PoS (Proof-of-Stake) index. The PoW and PoS indexes are in addition to the ‘standard’ equity market styles small, medium and large-cap cryptocurrency indexes. The three indexes are below:

Weiss Ratings Small Cap Cryptocurrency Index Weiss Ratings Mid Cap Cryptocurrency Index Weiss Ratings Large Cap Cryptocurrency Index

 

The best performing index out of the three charts is the Large-Cap index, of which Bitcoin represents 60.51% of the Large-Cap index. The Mid-Cap and Small-Cap all show similar performance against each other – but drastically underperform against the heavily weighted in Bitcoin Large-Cap index. There is another index that we should call our attention to the Weiss 50 Crypto Ex BTC index, more commonly known as the Altcoin Market.

Weiss Ratings Altcoin Market Index

Weiss Ratings’ altcoin market has Ethereum (ETH) at 22.89% of the index and Ripple (XRP) at 15.65% of the index. The other altcoins making up this index (greater than 5%, but less than 10%) are Bitcoin Cash (BCH), Litecoin (LTC), and EOS. The altcoin index shows a clear and persistent downtrend. Well, not just a downtrend, but a clear bear market. The altcoin market continues to move lower and just made a new low on December 25th. This kind of price action that we observe in a bear market is some of the worst that any long term bull could want to experience. In equity markets, bear markets can last for up to three-years. Does that kind of timeframe exist for cryptocurrencies? I don’t know. We may not know for quite some time. Equity markets have, literally, centuries worth of price data to review. Cryptocurrencies have barely ten years of data. One thing is certain though: the bear market that continues to plague the altcoin market is the largest, longest and most persistent in cryptocurrency history. Bitcoin itself is apart from the majority of the market and is a bulwark unto itself; altcoins have yet to create a single instrument or group that moves with Bitcoin or outperform Bitcoin consistently. Much of the blame here is due to Ethereum and Ripple being major underperformers even though they have the second and third largest market caps after Bitcoin. From the look of the current altcoin market, the bearish trend looks like it will continue.