22 August 2021: The Crypto markets have since continued their upward momentum over the past week as Bitcoin shoots towards $50,000 USD and Cardano blasts to new all time highs. This weekly update will check in on the performance of Bitcoin, Cardano, analyze the Fear/Greed Index, and offer some analysis on market projections.
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Cardano up Around 150% In Past Month
With the hype of some much needed September updates on the horizon, Cardano has been on a big rally since 20 July, bottoming around $1 USD and is now rallying past $2.50. ADA as of today has minted a new all time high, an impressive turnaround from the May correction.
With the bull market confirmed, a potential $3 and beyond ADA is simply within reason at this point in August. However, we must caution against opening a position with ADA at the top of a nearly 150% rally. In the final section of this article where we provide analysis on the Fear/Greed Index, we will explain why. Check out the price action below:
In addition to Cardano, both Bitcoin & Ethereum have been climbing, helping to pull the entire crypto market higher. Since 21 July, Bitcoin has climbed up with a 67% gain. Over that same timespan, Ethereum has also risen by around 87%. Bitcoin has been consistently tracking in a new price channel, finding solid ground each week to continue on. Based on the current trajectory, if this price channel remains intact, Bitcoin should be close to or at new all time highs by mid-September. Take a look at the chart below:
Short Term Bitcoin Analysis
Taking a look at the new price channel, currently Bitcoin is hitting resistance right around the $50,000 USD mark, precisely where Bitcoin fell below and then corrected back in May. In the short term, a pullback towards support at $46,500 and then a bounce back could help to provide the momentum for Bitcoin to break through and reach $50,000 USD again by the end of the month. Additional momentum could also come in the form of a larger pullback on hard-rallying alt coins like Cardano, resulting in some capital moving towards the more price-stable asset in Bitcoin over the short term.
The Dreaded Fear/Greed Index
Back in July, when looking at the cryptocurrency fear/greed indicator, the market was still demonstrating extreme fear despite having bottomed after the May correction. Since then, the market as shifted into a large rally, bringing in gains in some instances of 100%+ returns. Currently, the same indicator is now signaling that the market has done a full turnaround towards extreme greed. Take a look at the Fear/Greed Index below:
Historically, the Fear/Greed Index is a solid indicator on when it might be smart to begin booking some short term profits. Cardano has brought gains of over 1.5x since 21 July. Those that bought the bottom of that rally should now be looking to book some profits. Moving small percentages of your portfolio to stablecoins can help lock in gains from massive rallies like the one we have seen in the market over the past month. This profit booking would obviously result in a pullback. Bitcoin appears ready for at least a small pullback as does Cardano when viewing the current hard-charging price action.
While pullbacks are notorious for the spawning of new FUD, a correction (especially on Cardano) would be healthy. It could also provide a brand new entry point on rallying assets like ADA. This is precisely why we caution against FOMOing into a 150% rally. It can also be stated that a correction over the short term is by no way guaranteed. However, if market sentiment continues to stay within the extreme greed range, the probability of a pullback increases over time.
Summary
Substantial gains have been made over the past month for those that chose to buy at the now confirmed market bottom. Many coins have rise by more than 70% and have since climbed uninterrupted. With the Fear/Greed Index now signaling extreme greed, a pullback over the short term does appear likely. While it is impossible to tell the future, it is imperative to follow the historical trends and trade opposite the market.
Long term bullish sentiment is by no means at risk at this time. For those HODLing for the long term, a pullback or correction in the short term simply serves as an additional buying opportunity for the next 6 months. As always be sure to conduct your own due diligence prior to buying, selling, or exchanging any assets or making financial decisions. See you next week!
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