In the prior week, the entire crypto market was engulfed in a broad-based sell-off. Triggered by a strengthening U.S. Dollar Currency Index (DXY), the cryptomarket in tandem with the commodity and equity markets declined.
The second-largest crypto asset by market cap, Ethereum was also crushed in the broad-based market selloff as it cascaded to lows of $314. Earlier in the month, ETH bulls pushed prices up towards $500. Ethereum however rebounded from its lows and has maintained stability above the $300 support zone as it rebounded above the $335 and $340 levels.
Ethereum has been trading in tandem with Bitcoin (BTC) as its lows were subsequently set when Bitcoin plunged to lows beneath $10,200. Bitcoin also rebounded and is trading presently at $10,717.
ETH/USD Daily ChartAt the moment, Ethereum (ETH) is presently trading at $352.
Following Bitcoin and Ethereum drop from recent highs, a pertinent question has arisen in the hearts of many as to what phase of the market cycle cryptocurrencies are in and what will be the possible outcomes of such a phase.
A pertinent question being asked is if this current phase signals the early switch-on of a bull run or the start of another bear market? Kain Warwick, Synthetix founder and also a crypto market player in the last eight years recently stated that this current ongoing price action and fundamental trend shares semblance with that seen in 2016.
Michael van de Poppe of Amsterdam stock exchange corroborated that the present market structure is resembling only the start and build-up of a potential bull run similar to the sentiment and momentum of late 2016.
Warwick went on further to state that having lived through two previous crypto cycles, he thinks that the market’s recent situation draws parallels with that of 2016, which was the “calm before the 2017 storm,” this he said:
“I’ve been trying to work out if we were in 2016 or 2017 for the last 6 months. This last week firmly put me in the 2016 camp. It’s shocking how similar human reactions are to the same stimuli. After the dump in July 2016, I could not convince anyone to buy BTC @ $500…”
on the possible outcomes of this present phase, Warwick had this to say:
“So many things are happening simultaneously that it is impossible to track the potential consequences of all of them let alone the combined consequences of stitching them all together.”
However, other commentators maintained that despite the slow price activity recorded in the crypto market, a parabolic growth trend will be the imminent outcome.
Chris Burniske, a partner at Placeholder Capital, recently commented that he thinks that Ethereum will hit a market capitalization of $1 trillion in this market cycle. Other commentators spoke similarly on Bitcoin, stating that the chances of BTC having another exponential growth trend in this market cycle are likely.
Ethereum however is nearing a historical moment because if history rhymes, ETH may be able to climb significantly higher in the months ahead despite the weakness it’s presently depicting as a result of the drawdown. In an analysis of the cryptocurrency’s previous uptrends, Messari indicated that it could see plenty of more pullbacks as it climbs higher.
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