12 September 2021: After the brief correction following El Salvador's adoption of Bitcoin, markets fell into a period of consolidation. During the volatile trading sessions, a few winners of the week emerged, led by Algorand's massive 98% weekly gain. This article will cover some of the week's big winners as well as provide updates on Bitcoin & Ethereum after the correction.
Bitcoin, Ethereum Lead Market Drop
The correction ended up with Bitcoin finishing the week down 7.5% and Ethereum sinking 12%. Coins dropping 15% or more Polygon, Monero, Aave, Maker, PancakeSwap, and more. While it was a volatile week for Bitcoin, stability has been found right at support just above the $45,000 mark and has since risen above $46,000. It should also be noted that the 50 day moving average is situated directly at that support for Bitcoin. Take a look at the Bitcoin chart below:
Judging by the slow down in Bitcoin volatility and the coin being directly at major support, the probability of this being a great long term entry point, or opportunity to add to holdings, is high. Ethereum is showing a similar setup, though there is room for Etheruem to drop back down to support at $3200. All in all, the market's big coins appear to be entering a stable phase of consolidation or even have room for a nice move back up.
Algorand Doubles In Value
This week's big winner is no contest. Algorand, after building some solid momentum in previous weeks, finished this past week with a major 98% gain - allowing $ALGO to double in value. Algorand is currently hovering just over $2.40 through some heavy volatility. Take a look at Algorand's chart below:
After a major, short term explosion in price, it is never a bad idea to book some profits and move those earnings into big coins like Bitcoin that are currently sitting in a 7.5% dip. The FOMO sentiment on Algorand has effectively set in, though this could push the price even higher over the short term. That said, it is important to reassess risk tolerance after major weekly gains like Algorand has had. Long term, Algorand is a fantastic option for accumulation and still have plenty of time this bull run to continue to bring in new gains. Maximizing returns on these runs will help to raise overall profits at the end of this bull run.
Fear/Greed Index Confirms Correction
After reaching a market sentiment level of extreme greed, the index has officially confirmed the correction and has returned to a safe level of fear. This also adds to our bullish position on major coins like Bitcoin & Ethereum. It should also be noted that these corrections are healthy for overall market functionality - precisely why booking profits in Algorand after a 2x return is our reccommendation.
When considering the Fear/Greed Index, from a mental standpoint is it basically a way for an investor to buy the "dip" in confidence in the broader market. When the market gets fearful, the index drops and allows smart traders to add to their positions at discounts. When greed is dominant in the market, those are the best times to book profits prior to a correction.
The chart above is the tracker for the Fear/Greed index in value - ranging from 0 (extreme fear) to 100 (extreme greed). Circled in red is currently where market sentiment lies. Such a correction may allow the market to enter another long period of consolidation followed by solid weekly returns. When it comes to gauging when / if to take profits or make a market entry, this index is extremely helpful to get a glimpse of the broad attitude of the market.
Summary
Although the correction in Bitcoin & Ethereum did spook markets, this was 100% a healthy correction. Bitcoin and Ethereum are still above $45,000 and $3200 respectively, indicating a possible new major platform of support as the bull run continues on. Other altcoins like Litecoin, Polygon, and Maker also experienced necessary corrections to continue on a healthy track. While further volatility may be in store for the month of September, the market has given us no indications of a larger problem.
Of course, it is always important to take note of the non-crypto economy, including the stock market, FED policies, unemployment, and other economic indicators. Slowdowns in the economic recovery have been observed and stock prices had multiple down days in a row. It is always important to keep portfolios balanced and ready for anything that may come up as a suprise. Once again, we reccommend reassessing risk tolerance at this time and creating a plan of action moving forward into the back half of 2021. Best of luck this week!
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