- The cryptocurrency market is going through a quiet spell, but that doesn’t mean that nothing is happening
- The total market cap is forming a strong foundation for the next bull run
- A prior area of strong resistance has been turn into support this year
The cryptocurrency market is undeniably going through a quiet period, which typically means that it biding its time before the next explosion. However, while nothing appears to be happening on the surface, something very important is developing in the crypto markets’ medium term picture, something that clearly shows that crypto is setting its foundations for the next upward move.
Cryptocurrency Market Forming Strong Foundation
At first glance, the chart below, which shows the total cryptocurrency market cap, suggests that not a lot is happening:
Every bounce ends in a swift rejection before returning to its point of origin, but this is setting up a very important base. Let’s look at pice action going back to last year:
Here we see that the value of the market rejected in the $1.6 trillion band in February 2021 and again on multiple occasions in May and June. For almost a month it was unable to break through, which led in the end to over $400 million being temporarily wiped off the market value as Bitcoin’s price dropped to $30,000.
What we have seen in the past year however has given us reason to hope that better times are ahead:
Ever since the value of the cryptocurrency market first dropped back to this key $1.6 trillion level in January this year it has turned it into a very solid base, acting as support on multiple occasions when the market value failed to reclaim key levels on the way up.
What this means is that the cryptocurrency market has turned a key level of resistance into strong support, support that, barring a huge fundamental shift, looks to be the bottom sentiment-wise. How long this kind of price movement will carry on for no one knows, but there is every change that the rest of 2022 could see the cryptocurrency market value continue to trundle along similar lines, using this same level as support and offering a good chance to increase your bag size before the next rally.