While most people would consider the current state of most markets to be volatile, nothing quite compares to the charts reflected on cryptocurrencies, experiencing devastating pullbacks one after the other but still managing to break past and ride a strong bullish momentum. And as a result of the increasing financial awareness and literacy surrounding digital assets and coins, we are seeing more and more people of the younger demographic investing their time and resources into cryptocurrencies.
However, beyond the vast bullish sentiment on the crypto market and the fundamentals that support further upside potential, we must always practice vigilance and entertain the risks and factors that could prove otherwise. And to help both seasoned and newbie investors navigate their way through the digital economy evolving right before our eyes, we’ll be going over the trends and indicators for both bullish runs and bearish pullbacks.
Cryptocurrencies Show No Signs Of Holding Back
Currently, no other investment market or vehicle matches the growth at which cryptocurrencies have been experiencing in the short span of a few months, and what people thought was the limit of where resistance would cause everything to crash down was actually the moment to catch a second wind. Therefore, given the innovative circumstances backing the crypto space and global economic recovery, it appears that coins from all corners of the globe have no plans of holding back.
- Bitcoin & Etheruem Create New All-Time Highs: On top of the list of things to consider is the undeniable fact that Bitcoin & Ethereum, the two leading coins in terms of market capitalization, have both managed to break past resistance and create new all-time highs. And while both cryptocurrencies are no strangers to a series of breakouts and subsequent pullbacks, there’s nothing else stopping the prices from pushing further upwards. Plus, with still around two more years before the next halving, scarcity and blockchain development will support the rise of an even greater digital economy.
- The Ever-Growing Popularity Of NFTs: In addition to Bitcoin and Ether creating all-time highs and blasting forecasts, we can’t forget about the ever-growing popularity of NFTs and the impact these tokens place on online communities and the digital world. And while their presence is still small compared to the dominant market share of cryptocurrency, NFTs are definitely on the rise and the successful NFT.NYC event held recently is proof of further growth in the making.
- Metaverse And The Necessity Of Blockchain: Last but not least, while research and development toward the creation of the Metaverse is a significant breakthrough by itself, this platform will undoubtedly require blockchain as a fundamental support for all its transactions. Sure, the seeds have yet to sprout, and there’s still the risk of immersive reality spaces failing to latch on once again, but you might want to consider investing in associated metaverse coins early before another economic boom.
However, We Might Be Facing A Bear Market Soon
On the opposite of the spectrum, despite all the apparent indicators pointing toward further bullish momentum, there’s also reason to believe that we might be facing a bear market anytime soon. And while there’s no way of telling until when or what price this breakout will maintain current volume, you wouldn’t want to be at the receiving end of a severe market crash that could wipe out your earnings. Namely, we are looking at the facts that (1) technicals are showing no areas of immediate resistance and (2) the risk of stricter government regulations and crackdowns on cryptocurrencies.
- Technicals Point To No Areas Of Immediate Resistance: If we were to invest, trade, and forecast based on the technical analysis of the charts alone, then, technically, there’s nothing much stopping Bitcoin from going above the $100,000 before the end of 2021 at its current pace. However, knowing that such a sudden jump is too good to be true, crypto investors must account for the risk of a short-lived bullish breakout that is subsequently followed by a significant dip in prices.
- Government Crackdowns And Further Regulations: Although a month ago we were assured by Federal Reserve Chairman Jerome Powell that there were no plans in development surrounding further regulation of cryptocurrencies, this sentiment could very well change as the market capitalization increases over time. And with the further introduction of stablecoins and futures-backed trading into the mix, there’s no precedent to reference on how the market will interact with new investment methods geared toward the crypto space. As a result, general uncertainty surrounding the future of crypto bears its appropriate risks as well.
Buy The Dip And Don’t Forget To Diversify Your Portfolio.
In conclusion, regardless of whether you support the notion of further upside potential for cryptocurrency or recognize the risks of an incoming market crash for the market, the same principle applies to buying the dip and diversifying for the sole purpose of financial security. And if you can manage both of these objectives, you’ll have no reason to worry about missing payment obligations on your property or even purchasing a brand-new Nissan car.
