Friday, January 27, 2023

For Altcoins, Is the Bear Market Giving Way to Sideways Chop?

For Altcoins, Is the Bear Market Giving Way to Sideways Chop?

The cryptoverse’s markets are cyclical just like everything else in life. Altcoins surge against bitcoin, then correct. Rinse, wash, and repeat. Now, Fundstrat Global Advisors’ Tom Lee is calling it: the worst of the ongoing altcoin bear market is over, though there could be a “purgatory period” for approximately 150 days until the bulls are back. 

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In Purgatory Now, Bullish Cycle May Start in August?

The cryptocurrency space has had no shortage of daily bleed-outs in the markets over the past few weeks. But the worst of the chop may be over for now for altcoins according to a new Fundstrat investor note written by Tom Lee, Sam Doctor, and Robert Sluymer.

In the document, the trio lay out their case for “purgatory periods” — or long stretches of consolidation where the markets are mainly sideways, not bullish or bearish. They suggest these periods typically last between 70 and 231 days.

It appears we’re in the midst of the latest of these sequences, the Fundstrat wizzes claim, with their data suggesting crypto’s bear phases generally last as long as their preceding bull runs, meaning the space could be locked into a consolidation phase for the next few months.

Lee et al. wrote:

“We believe the current purgatory period will last for 150-175 days, implying a bull market for alt-coins really starts mid-August to mid-September. The reason for this longer duration is the current dark clouds overhanging crypto are really alt-coin specific.”

Large Caps Look Safer for Now

Lee and his peers think altcoins aren’t necessarily out of the woods yet.

With that said, they suggest that relatively stable big cap coins — roughly the top 10 cryptocurrencies by current market capitalization — are the safest crypto investments in the interim.

At press time, that top 10 looks like bitcoin ($152 billion USD), ether ($56 billion), XRP ($27 billion), bitcoin cash ($17 billion), litecoin ($9 billion), Cardano ($5 billion),  NEO ($5 billion) Stellar Lumens ($4 billion), EOS ($4 billion), and IOTA ($3 billion).

What’s your take? How will you handle a sideways market if Lee and his peers are right? Sound off in the comments below. 

Images Bloomberg, The Western Producer

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