Crypto made a big comeback and its biggest network has rebounded by around 80% in 4 months. Now around 5,400 USD per 1 , general mood is positive to ignore a host of risk factors which could provide a correction to this rally or curb it for longer.
Briefly here goes my observations:
Tether might not be integral to the sector, but its hit on sentiment is on the very light side. With Bitfinex risking client funds and Tether risking its parity with more than improper actions, Tether at around 99% to the Dollar shows a FOMO mentality in the market.
Transaction sizes, transaction numbers and active addresses all point to an increased small investor participation in the market. This is occurring with growing confidence due to rising bottoms where every pullback has been a buying opportunity. Without referencing a price, this investor behavior when exhausted can easily be the first driver of a fierce downward move.
The market has moved from a consolidation and focusing on how to make crypto useful mentality to pick your and postpone some of the hard work for later phase too quickly. Consequently the bottom formation seems incomplete and the resurgence of interest is a ticking risk factor.
Meanwhile with new miners and various electricity options, cost of has come down. I don’t have the latest figures but even at 3,000 there was considerably higher hashrate compared to the all-time highs. So at 5,000+ and with better tech, I would surmise a lot of profitable miners out there and thus a potential channel for more sell side supply.
There is the usual low corporate issue, regulatory risk and a potential ban but in some form of other similar problems existed before as well.
As mentioned in the story below, I was bullish in February when the price was around 3,500.
Now I believe a major correction is overdue and change my stance to contrarian once again. Simply put a test of 5,000 now might find buyers somewhere around 4,000–4,500. With every passing day, some of those buyers will buy higher and that support might not hold when the correction comes.
To sum it up, reducing risk from now on and until the overdue correction is played out would be my preferred tactical approach for the appropriate traders.
May 2, 2019
Published at Thu, 02 May 2019 20:29:49 +0000
