The Cryptocurrency Market Is More Mature Than You Think
The cryptocurrency market is unparalleled in comparison to other asset classes when taking into consideration how vastly erratic and solitary these digital currencies are. Since developer Satoshi Nakamoto’s launch of the first cryptocurrency, Bitcoin, in 2009, the crypto market has been accessible to trade 24/7/365.
While factoring in the accelerated scope of trading, one can make the argument that the asset class is fairly mature. When you extrapolate the number of trading hours compared to the equities market (252 days a year, from 9:30 AM – 4:00 PM EST) this equates to nearly 48 years of trading when compared to normal trading hours (not including pre and post-market trading in the stock market).
So What Does This All Mean To The Everyday Investor?
Is the cryptocurrency market actually booming, or is it maturing? A strong case can be made for 2017, which was a revolutionary year for the cryptocurrency landscape led by increased adoption and scalability, as well as new product platforms facilitated by increased investor appetite. Investors drove the price of Bitcoin from $900 to nearly $20,000, as speculation ran rampant.
However, markets are efficient and pricing needs to be taken into consideration when layering in technical analysis, news, and market sentiment. Now that crypto winter has come and its prolonged death spiral into summer seems to have led to capitulation, what is next for the cryptocurrency market after Bitcoin (which accounts for nearly 53% of all crypto related trading volume) has dropped close to 70%?
Is Now A Good Time To Enter?
At the current moment in time, Bitcoin is hovering around $6,500, remaining relatively flat over the last 30 days. The SEC is presumably reconsidering its recent proposals on a Bitcoin ETF, the biggest catalyst for a future bull-run according to many experts. Charlie Lee, creator of Litecoin (LTC), appeared on CNBC earlier in the week, stating the following:
“In the long-term, [price] tells us the success of cryptocurrencies, but short-term it doesn’t really tell us much. For example this year, there’s been so much adoption in Bitcoin and Litecoin, but their price has dropped 60-70 percent. It’s because it’s so volatile, it’s all about speculation these days, but in the future the price will reflect the success of the currencies. I’d like to see more [talk around] Lightning Network and sidechains, ways of helping Bitcoin and Litecoin to scale. I think with the price depressed, it’s actually a good time for people to […] get stuff done. That’s what I’ve seen in the past few bear markets actually.”
Lee is a proponent of dollar cost averaging, as long as the average investor is not spending money they cannot afford to lose. He also speaks to current market pricing as a fantastic entry point for long term holders. The bears may finally be losing momentum, and if current prices hold above the $6,250 point of resistance for the next couple of weeks, bulls will be more comfortable investing in cryptocurrency again.