We were attacked by a bear (market)
The bear (market) savaged crypto. But did it change the general trendline of crypto growth?
How the trendlines look now
Not too bad!
I do not see any significant dip or change to the trendlines. This dip was large and protracted. The reasons are numerous, a very overbought market corrected itself while simultaneously being hit by all kinds of FUD. The FUD examples are literally too numerous to mention.
The result was an overcorrection can be handled in two ways:
We could treat it as an outlier on the charts - let it break the trendlines, but not change them. It's a short-term anomaly. It's happened before in the highly volatile past of crypto. To treat it in this way would not be wrong, and it would allow for more precise predictions going forward. The trade off is (obviously) decreased prediction accuracy i.e. another outlier could occur and then that would fall outside of our new trendlines, leaving us in the dark. I have chosen to handle it the other way;
We could amend the trendlines to incorporate the recent large bearish overcorrection. I like this method; it's not better, but it includes all available data and will be more reliable going into the future (at the expense of precision).
This is how I see the trendlines now:
Made by Bit Brain using TradingView
The blue line is the peaks line, black is the troughs and red is what I consider to be the mean (where the price should be).
I have used BTC instead of total market cap, because I can't do total market cap on TradingView. It does not change much (the general trends are similar), but it is worth noting that with the recent decline in BTC's market dominance, the total market cap picture is more positive than that of BTC.
The chart goes back into 2014, giving a fairly complete picture of relevant BTC history. It is worth noting that even on this logarithmic plot, the trendlines still curve upwards. This is because the markets grow so fast that they outpace logarithmic growth. I consider this to be indicative of the fact that:
Crypto investors are putting increasing amounts of their total portfolios into cryptocurrencies; and
New investors are entering the market at an increasing rate. (see this post for why that is: https://steemit.com/cryptocurrency/@bitbrain/bitcoin-price-predictions-chart-display-part-3-the-s-curve-more-good-news)
Full disclosure: I should remark that I am not completely comfortable with that chart. Looking at the red trendline, I think it is a bit too steep. I think that prices will rise slightly slower than what it seems to suggest. It is a very long-term chart and should not be used for accurate short to medium-term price prediction, use the next chart for that.
In the short-term you can use straight lines on a logarithmic plot, but they become increasingly inaccurate over time. I try not to use straight lines on periods exceeding one year. This is where I see the current medium-term market trend to be on a straight line logarithmic plot:
Made by Bit Brain using TradingView
The dashed lines are the maximum and minimum limiting lines for price and the blue trendline is where the price should be. I therefore believe that the price should continue to rise at a higher than normal rate until it meets this line again. (As I previously predicted and showed in this post yesterday: https://steemit.com/cryptocurrency/@bitbrain/bitcoin-predictions-by-bit-brain)
Summary
So the overall picture is that the outlook remains very positive: increasing market growth rate for the foreseeable future. Obviously more dips will occur, and probably more crashes if the market grows too fast again, but if you just keep holding crypto then you should win the long-term game.
Always keep an ear to the ground, but at the moment I see absolutely no indication that crypto will not continue along the path of these trendlines. If you're not in crypto yet, what are you waiting for?
Enjoy the rest of the weekend everybody.
Yours in crypto,
Bit Brain
DISCLAIMER:
I am neither a financial advisor nor a professional trader/investor. This is not financial advice, investment advice or trading advice. Unless otherwise stated, all my posts are my opinion and nothing more. Crypto is highly volatile and you can easily lose everything in crypto. You invest at your own risk! Information I post may be erroneous or construed as being misleading. I will not be held responsible for anything which is incorrect, missing, out-of-date or fabricated. Any information you use is done so at your own risk. Always Do Your Own Research (DYOR) and realise that you and you alone are responsible for your crypto portfolio and whatever happens to it.