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The 2021 cryptocurrency bull market is not over. In fact, after this massive shakeout across the market the past week, this could arguably be the most profitable dip this year. Yesterday morning (5/19/21) at around 9am, the floodgates were opened on Bitcoin and other cryptocurrencies and most of the market fell well over 35% in less than an hour. After a significant low of $30,0000 USD on Bitcoin, it has since rallied over 30% to its current valuation this morning at $40,000 USD. This places Bitcoin just above the 200 day moving average. I released an article recently on why I believe this is important and the sell off did not indicate the end of the bull run. That is available here.
Many different cryptocurrencies are technically up more than 20% including Bitcoin, Ethereum, Chainlink, and others. This will not be immediately evident until exchanges adjust as we close in on 24 hours past the initial massive market drop. Ethereum made a significant bottom yesterday at a staggering $1860 USD, a massive correction of the previous all time high. Ethereum is currently sitting at $2700 USD.
Visible in the charts above, it can be seen where yesterday morning most of the cryptocurrency market "crashed" leaving many coins 20-50% down. There are numerous factors that could have helped influence this type of massive shakeout. First off, the drama at the beginning of the week surrounding Elon Musk and Tesla set the tone for the cryptocurrency market early on. On top of that, an enormous amount of FUD (spreading of fear & uncertainty) from multiple institutional and international sources added fuel to the fire that helped propel the market downward. Among other reasons, analysts are blaming the news that China had banned institutions from offering cryptocurrencies. Even JPMorgan weighed in and stated that institutions were selling Bitcoin for gold.
So, what really happened?
While it may never be known for certain, there has been deep speculation that this was an organized effort to shake out holders. Through some digging around Reddit and other sources, some posts were found that seem to explicitly detail the coordinated efforts of a "massive firm" to functionally manipulate the price of Bitcoin to A. shake out an undisclosed billionaire Bitcoin holder and B. to create a massive dip before rallying back to all time highs, similar to 2017 for Bitcoin before it shot up to $20,000 USD. This is evident in the following graphics:
This is pure speculation. There is no real evidence other than accounts such as these in the graphics above that detail this sort of scenario. Regardless, Bitcoin recovered exactly back to the 200 day moving average, ensuring the bull run stays intact. Not only did it stay intact, but because of the absolutely massive dip that was created on a number of coins, many will begin to appear today (5/20/21) that they are in fact exploding from the bottom as I mentioned above. With Bitcoin showing a 30% increase on the day off the low of $30,000 USD, it could actually end up having the reverse psychological effect on the markets. Instead of creating more and more fear due to the drop yesterday, it could actually start a FOMO wave from investors who either were looking to buy the bottom or investors who got shaken out during the rapid sell off.
The entire cryptocurrency market will be extremely interesting to watch over the next few days. Regardless what the reason was for the sell off yesterday, let this already be a lesson to HODL projects and coins you truly believe in. Cryptocurrency is highly volatile as an emerging technology and should be treated as such through any situations.
As always, do your own due diligence before choosing to invest as this is not financial advice, just my analysis of the situation.
