Cryptoeconomy: It’s Alive! But Is a Wider Bear Market Just Beginning?
February 8, 2019 by William Peaster
After no shortage of sideways chop in recent weeks, the top cryptocurrencies saw their values spike on Friday, Feb. 8th, as acute buy pressure hit the cryptoeconomy. Will the performance prove to be another mirage in the wider crypto bear market, and is that bear market far from over?
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Blip of Acute Buy Pressure Hits Cryptoeconomy
Cryptocurrency markets have been still enough recently that, at times, watching paint dry may have proved more interesting. But forget about paint, at least going into the weekend, as cryptocurrencies across the board spiked on Feb. 8th upon an acute wave of buy pressure.
The biggest riser among the top cryptocurrencies was litecoin (LTC), which rose more than 30 percent on the day. The coin’s community went abuzz one day prior upon a Feb. 7th announcement that the Litecoin project was moving toward implementing the privacy protocol Mimblewimble.
The other top risers among the top 10 coins were ether (ETH) and bitcoin cash (BCH), which rose around 15 and 13 percent respectively amid the demand spike.
As for the OG crypto, bitcoin (BTC) climbed some eight percent to hit a price tag above $3,650 USD at press time. XRP and stellar lumens were up by similar margins, while EOS, ADA, and Monero each saw their values spike more than 10 percent in the buy-up.
So what’s the ticket? Will this modest jolt of buy pressure give way to more sideways chop? Is it a first step toward another bull run? Or is the crypto bear market that began in the de-risking investment atmosphere of 2018 only just beginning?
To that last question, the answer may come down to token reserves.
Reuters Report Suggests Token Sell Pressure Pent Up
Somewhat ironically out on the same day as the cryptoeconomy’s first markedly green push in a while, a new Reuters report indicates that forthcoming token reserve issuances may lead to bearish trends for years to come.
Crypto bear market threatens to last as potential token supply weighs https://t.co/9Fi5FG6tpi pic.twitter.com/IblEJfByx3
— Reuters Top News (@Reuters) February 8, 2019
At the crux of the possibility is token supply. Many projects in the space have large token reserves that are yet to be released — or sold. And many token projects used contracts that gave early investors rights to future token allotments.
Notably, both dynamics could lead to sustained selloffs in the years to come.
“I don’t think anyone has any idea how much hidden inflation there is in the form of token reserves that are going to be unwound gradually,” Messari’s Ryan Selkis told Reuters.
So the grand question for now is this: will demand rise in kind to level out the effects of large amounts of tokens hitting the market going forward?
Whether such sustained demand can materialize in the interim remains to be seen, though days like Feb. 8th offer a glimmer of hope for those who’ve made bets in the cryptoeconomy.
Fundstrat’s First Cryptoeconomy Outlook for 2019 Is Out, Says Recovery May Be Nigh
Fundstrat’s Tom Lee has become Wall Street’s most recognizable cryptocurrency speculator over the past two years. On Feb. 8th, Lee highlighted Fundstrat’s newly published 2019 crypto outlook, which predicts the bottom will be in this year.
CRYPTO: we published our 2019 crypto outlook this am. Positive incremental developments coming. First paragraph below. pic.twitter.com/JkkBEvRmxl
— Thomas Lee (@fundstrat) February 8, 2019
“Is 2019 the mainstream breakout year? Nope,” the report read.
“But that is not necessary for crypto prices to eventually bottom in 2019 and by the end of 2019, we expect prices to be staging a visible recovery.”
Only time will tell if that outlook pans out, of course. But it’s annunciation may be an early sign that sentiment is starting to shift in the space. There may be a light at the end of the tunnel after all for traders fed up with crypto’s bleedouts since last year.
Or not, on the flip side — bitcoin’s longest bear market to date may just be starting to bite. We’ll all have to wait and see.
What’s your take? When do you estimate crypto’s next bull run will take place? Let us know in the comments section below.
Images via CoinBillboard, Pixabay
