- Crypto retracement was anticipated long before the pandemic worries
- Compared to the stock market, crypto markets were calm and normal
- However, it means “the selloff is likely not done yet”
The crypto market made some recovery on Monday as Bitcoin went above $8,900 and altcoins recorded a much higher percentage of gains.
This rebound came after the digital asset lost 16% of its value last week, which occurred in the same week the stock market crashed. However, the crypto correction was “extremely mild” by comparison.
The retracement by the crypto market was also “right in line with what our timing models had been anticipating all along, even before investors began to worry about a pandemic,” said Weiss Crypto Ratings.
The stock market had its worst one-week decline since the 2008 recession and the Dow Jones Industrial Average had its worst one-day drop ever. While the market lost trillions of dollars, “it was reassuring to see crypto markets so calm and normal.”
Overall, crypto-assets according to Weiss Ratings, are trading more in line with the traditional safe haven like gold than like risk-on assets. In a disaster week for world markets, cryptos behaved “very much” like any normal correction week.
Sell-off is likely not done yet
The Weiss 50 Crypto Index fell by 9.18% in comparison to far more “stable” S&P 500 which fell by about double this amount. Removing bitcoin from this index, presented a similar picture, the altcoins sector of the crypto markets was down 11.11%.
The Weiss Large-Cap Crypto Index was relatively robust, down only 8.46%. The Weiss Mid-Cap Crypto Index meanwhile, fell 12.85% and the Weiss Small-Cap Crypto Index went down by 9.33%.
Small caps are usually the ones to fall much harder but this time they held up relatively well, in fact, they are trading in line with the broad crypto markets that means “the selloff is likely not done yet.”
“It’s only after we see capitulation on the most speculative names that we can confidently call for a bottom.”
In 2020, altcoins have doubled in price, some have surged even more so but didn’t lose much of its value last week. Once this strength wears off and the crypto assets work off their temporary overbought conditions, we might be looking for a bigger correction.
“Our timing models indicate an important low is likely by mid-March,” said Weiss Crypto Ratings’ Juan Villaverde. As per their models, after this low, we could see “another massive bull run for Bitcoin.”