Ethereum, XRP, Cardano and DOT: Could this indicator be the buy signal traders want?
The sheer volatility of crypto markets is often agonizing. When the markets are undergoing a freefall, traders are usually panicking and praying for the decline to stop. Yet, during periods of sideways consolidation, there is more market anxiety, as investors speculate whether the market is going to break upwards or stumble further. A similar sentiment is panning out for Ethereum and the rest of Altcoins.
Crowd Fear is slowly piling up: good or bad?
According to data, traders are currently exhibiting fear and there is an air of caution around present market conditions. Most coins haven’t registered instant recovery, and it has led to the drop of weighted social sentiment.
Historically, such market periods have also been a profitable buying opportunity. While some alt traders will take the dive and possibly buy at the current market prices, it might be more reasonable to hold your horses.
History may not repeat itself for Ethereum and Co.
Considering Ethereum to be the major flag-bearer of the Altcoin rally, it presently showcases a negative sentiment. During August-September 2020, the social sentiment bore similar ratings, which turned out to be a massive buying opportunity. However, here is the key difference between then and now.
Back in mid-2020, the industry at large was still recovering from the drop during March 2020. Ethereum exhibited a nominal realized value, and the market was not overheated. Therefore, when negative market sentiment occurred, many remained confident of a bullish recovery, for the assets were still lower than their previous ATHs. March 2020 was being termed as a black swan event, and an overall bullish momentum was evident.
Right now, the playing field isn’t the same. Ethereum and other Altcoins have surged past their previous highs. Cardano registered 10x gains, and Polkadot entered the 10-ten rankings. MATIC is on a tear, and Uniswap is leading the DEXs revolution. Buying and Selling volumes are soaring aggressively for these assets. Plus, we have already gone through one major bull cycle.
Therefore, the current negative social sentiment does not scream the same buying opportunity that we saw last year. It is simply because most Altcoins have higher realized values at the moment.
You have to wait it out
While taking a chance with Altcoins in the past was adventurous, traders need to be more careful and look for bull confirmations, before stepping their toes in again. The unreliability of the market does not scream bullishness yet, so it is better to be on the sidelines for now.
Ryan Selkis, popular crypto commentator and Messari Founder conveyed a similar view on the market. He stated,
As someone who is a) a terrible trader, and b) a multi-cycle survivor, i can tell you that this doesn’t feel like capitulation or dark before the dawn.
Too close to the cycle top to tell whether another rip your face off rally is coming or we grind lower.
— 0xRyanSelkis (@twobitidiot) May 30, 2021