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The sheer volatility of cryptocurrency markets is sometimes excruciating. When the markets are in freefall, traders typically panic and wish for the collapse to end. However, there is more market anxiety during periods of sideways consolidation, as investors worry whether the market will break upwards or continue to crash. A similar mood is emerging for Ethereum and the other Altcoins.
Crowd Fear is slowly piling up: good or bad?
According to data, traders are currently exhibiting fear and there is an air of caution around present market conditions. Most coins haven’t registered instant recovery, and it has led to the drop of weighted social sentiment.
In the past, similar market situations have also provided a successful purchasing opportunity. While some alt traders may take the plunge and purchase at present market levels, it may be more prudent to hold your horses.
History may not repeat itself for Ethereum and Co.
Given that Ethereum is the key flag-bearer of the Altcoin boom, it is currently showing a negative mood. During August-September 2020, societal mood had comparable ratings, resulting in a major purchasing opportunity. The fundamental difference between then and today, though, is as follows.
Back in mid-2020, the industry as a whole was still reeling from the March 2020 slump. The market was not overheated, and Ethereum had a nominal realized value. As a result, when negative market mood arose, many people remained optimistic for a positive comeback because the assets were still lower than their prior ATHs. March 2020 was being referred to as a black swan event, and there was an overall bullish trend.
The playing field is not the same right now. Ethereum and other altcoins have surpassed historical highs. Cardano experienced 10x gains, and Polkadot joined the top ten. MATIC is on a roll, and Uniswap is at the forefront of the DEXs revolution. Buying and selling volumes for these assets are skyrocketing. Furthermore, we have already had one significant bull cycle.
As a result, the present negative social attitude does not signal the same purchasing opportunity that we witnessed last year. It is simply due to the fact that the majority of Altcoins have greater realized prices at the time.
You have to wait it out
While taking a chance with Altcoins in the past was risky, traders must now be more cautious and wait for bull confirmations before dipping their toes back in. The market’s unpredictability does not scream bullishness yet, therefore it is best to stay on the sidelines for the time being.
Ryan Selkis, a famous crypto pundit and the founder of Messari, has a similar outlook on the market. According to him,
As someone who is a) a terrible trader, and b) a multi-cycle survivor, i can tell you that this doesn’t feel like capitulation or dark before the dawn.
Too close to the cycle top to tell whether another rip your face off rally is coming or we grind lower.
— 0xRyanSelkis (@twobitidiot) May 30, 2021