Crypto Update: Market Cap Forms Short-Term Bottom

The total crypto market cap almost broke below the $100 billion price level earlier this month. At that point, the market cap lost close to 88% of its value from the 2018 peak of $835.5 billion in January. In about twelve months, the crypto market wiped out over $735.1 billion in value.

With such an astronomical loss, it’s no wonder that popular media outlets are calling for the death of Bitcoin (BTC/USD) and crypto in general. Nevertheless, this type of gloom and doom sentiment often hints that the bottom may be in. Acting on this nugget of wisdom, we pored over charts to see if the downtrend is over.

What we discovered is that we have a window to recoup losses or grow our capital. It appears that the bleeding has stopped for now. In this article, we reveal how the crypto market cap has formed a short-term bottom.

Strong Rejection of Lower Prices at Parabolic Support

It seems that the parabolic support is the lifeline that has kept numerous crypto markets alive. Bitcoin along with many other altcoins have found solace at that high demand area. To understand its importance, you must learn its usual traits:

  • Former heavy resistance flipped into support
  • This support was retested with strong rejection
  • The support inspired the formation of a hammer candle
  • Support that sparked the parabolic run

If you look at the total crypto market cap, the price area between $98 billion – $100 billion used to be a heavy resistance back in June 2017. The market breached it in August 2017. Bears tried to take it out in September 2017 but bulls strongly rejected lower prices. The failed swing low ignited the parabolic run that pushed the total crypto market cap to over $835.5 billion.

Crypto 2017 parabolic run

This price action tells us that participants really like buying between $98 billion – $100 billion. They like it so much that they relied on it to ignite a buying mania and enabled the market to grow by more than 750% in four months.

Therefore, it comes as no surprise that the total market cap is bouncing at this level with almost the same reaction. Check out how the market is forming a hammer candle on the monthly chart indicating the strong rejection of lower prices.

On top of that, Bitcoin which makes up 53% of the market cap, is also getting a relief rally as soon as it hit its parabolic support area of $2,800 – $3,200.

Bitcoin weekly chart

Lastly, the altcoin market cap is following the same reaction. It bounced around its parabolic support of $48.8 billion. The bounce is so strong that it is looking to take out our range midpoint of $63.68 billion in one week.

Altcoins market cap weekly chart

These reactions tell us that the entire crypto market has found a short-term bottom. This is something that we can take advantage of.

Expected Short-Term Price Action

With a short-term bottom in place, we can expect the market to range trade with a bullish bias. It appears that the market has reached the level where the smart money is willing to scale in. We believe that the entire crypto market can climb as high as $186 billion in the next few weeks. Before we can get there, however, the market must first deal with the range midpoint of $142.66 billion.

Crypto market cap weekly chart

Exploit this wide range of $100 billion – $186 billion to grow your investments. You will find numerous opportunities that can help you recoup your losses or exponentially increase your capital.

Bottom Line

With the crypto market cap rallying at its parabolic support, we can be confident that a short-term bottom is in. With this development, we can expect the market to trade bullishly in the next several weeks. This is an opportunity that you should definitely take advantage of.

 

Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.