It has been a wild ride, indeed. Starting from the bottom in March 2020, the total market capitalisation has grown by over 20 times.
What to expect now?
Despite higher volatility on the downside in 2021, the trend of the crypto market capitalisation has been growing steadily since 2020. The valuation traded most of the time within the green channel while having a brief deviation on the upside at the beginning of 2021. That was a sign that the market was over-heated, and that led eventually to a broader correction.
Projecting the retracements Fib levels of the up move from 2020 to early 2021, the correction found solid support at 0.5 level and then at the 0.23. That's what you would expect from a healthy trend which is rebuilding momentum. Today the market is hovering around the previous all-time high levels. Should that hold, a new strong leg on the upside is likely.
The market is still in a bull cycle, and therefore you need to keep in mind two key elements.
First, the more the crypto prices consolidate in the channel, the more likely the market will experience a new blow-off move. As time passes, the magnitude of this move could be larger. As the channel's top gets higher and higher, investors and traders will set their targets accordingly.
As a rough estimate, the target will be around 150% in one month, and in three months, it will be 250%.
On the other hand, never forget that the higher is the rise, the harder is the fall. We are likely at a mature stage of the bull market, which means that even if a 200% upside looks appealing, that comes with a downside risk of 70 to 80%. In this regard, the divergence on the RSI looms like a dark ominous over the market.
It becomes increasingly important to set your targets and comply strictly with your plan. Rotating gradually part of the portfolio into higher quality coins and stable coins will protect your capital when a more severe correction hits the market.
Risk management has never been more important! 🔒
