Crypto Bull on Pause. Short-Term Pullback Looming? No Matter What, 2020 Crypto Bull Is Still on Its Way
|At this time one week ago, crypto markets had just enjoyed one of the biggest and broadest one-week surges of the year.
Our Weiss 50 Crypto Index (W50), the industry’s broadest price metric, had risen nearly 22%, while our Weiss Mid-Cap Crypto Index (WMC) had jumped by a whopping 44%.
So, it’s only natural for these assets to take a breather this week.
What does that portend for the near future?
After a big price surge with fireworks across the entire crypto marketplace, then a pause, a pullback is very possible. And our crypto cycles model is confirming that notion.
This week, the Weiss 50 Crypto Index was practically unchanged down just 1.03% as of Thursday’s close.
And the stall isn’t strictly a Bitcoin phenomenon. Even excluding Bitcoin, the Weiss 50 Crypto Ex-BTC Index (W50X) was only slightly more positive, up 1.58% on the week.
Splitting the markets by market cap confirms the sideways action:
The Weiss Large-Cap Crypto Index (WLC) was down 2.70%, led largely by Bitcoin’s minor underperformance on the week.
And the Weiss Mid-Cap Crypto Index truly tells the dead-zone story. It was virtually unchanged, up by a meager 0.03%.
What about small cap cryptos? A tiny bit weaker, but nothing to make a difference. The Weiss Small-Cap Crypto Index (WSC) was down 1.71%. In the volatile world of crypto (especially small-cap coins), that’s also practically nothing.
Here’s the key: Rallies in all our crypto indexes ran out of steam when they were just shy of breaking key overhead resistance levels. Continued rising — even for just another week — would have signaled a much stronger rally was in the making.
The lack of this signal, coupled with the fact that the markets have not seen a significant pullback since mid-December, tells us that one may be due.
Long term, however the outlook remains firmly bullish. Our indexes and cycles model tell us that that momentum is building for a very positive 2020 across the entire crypto asset space.
But it’s not just our studies of price patterns that lead us to this conclusion. Industry fundamentals have also improved markedly.
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