Happy Holidays to all my readers! We have a week left until Christmas and two until the new year, and hopefully 2019 will hold a bull rally for the Crytocurrency market. Bitcoin market had a “Santa Rally” of approximately 10% from $3,200-$3,500 along with the greater Cryptocurrency market. Altcoins like Ethereum, Dogecoin and Lumens saw double digit gains that have given some investors hope. If you followed yesterday’s advice to purchase Ethereum around $90, you are sitting on around 15% gains. What does the Santa Rally portend? Is this a dead cat bounce or the beginning of a bullish trend?
When analyzing any financial market, one must look at the chart, review the technicals and gain a sense of the psychological drivers. Bitcoin and the altcoin market has been devastated in 2018, seeing around 90% decreases in price and market cap. On the valuation front using technical indicators including EPS, P/E and daily moving averages, it is difficult to value cryptocurrencies currently. Keep in mind that 364-days ago, Bitcoin hit an all time high of $20,000/coin with only enthusiasm and hope guiding its movement. When looking at the current chart of Bitcoin, the resistance level is firm at $3,500 and the year has been plagued with descending triangle patterns leading to lower price levels for the coin. Bitcoin is also under its 200 daily moving average and this is a bearish technical indicator. Looking at this data brings us to the conclusion that the Santa Rally we may be seeing is part of market volatility and is dangerous at the current time. Price could break lower any time.
The Santa Rally is a good time to take some profits and take a pause before the market corrects. The extreme volatility of the Cryptocurrency market makes any Santa Rally suspect. I am not a financial advisor and do not make any financial claims, but I am taking profits during this Santa Rally into stable coins and cash. I will wait for the market to correct further, as the seasonal, technical and psychological indicators are not in line with profits delivered by old Saint Nick.