Monthly Crypto Commentary — April 2019

In bull markets, surprises occur on the upside.

Quick summary

  • The crypto market exploded in April confirming the end of the bear market.

  • Market corrections will occur regularly but staying long is the best approach.

  • More positive news will be announced in the coming months which will propel the prices higher.

Market overview

After a steady appreciation throughout March, the crypto market exploded in April with a gain of 28.6% in the first eight days. Several altcoins gained over 50% and a correction was imminent. At the same time, Bitcoin finally started catching up, after two months of underperforming the market. Having noted this shift, the market participants started selling some of their altcoin positions which resulted in a divergence.

While Bitcoin continued with its bull run throughout the month, many altcoins entered a correction phase. The market, as measured by the Solidum 20 Market Weight Index, returned 22.2% in April. The growth was primarily fueled by the Bitcoin rally, while many altcoins ended the month with negative performance.

Crypto market performance | April 2019
Source: CoinMarketCap, own calculations

Crypto market dynamics

In my 19 years of experience in various markets, I have learned that in bull markets, surprises mostly occur on the upside. Nobody expected the surge in prices at the beginning of April and at the end of March, some analysts even warned of the upcoming market correction. Some market participants also believe that we are still in the bear market and that the downtrend will continue.

Nonetheless, the change in the sentiment has proven obvious as the prices keep rising even when bad news break out. Tether developments can serve as a prime example. On 25 April, the New York Attorney General’s office alleged that Bitfinex lost $850 million and covered the shortfall from Tether reserves. The market reacted with a loss of 6% which was recovered in a week — as if nothing happened. If such news had appeared last year, the market would have been bleeding heavily.

In my December 2018 commentary, I stated that 14 December could have marked the end of the bear market. The developments in 2019 confirmed my assertion and now we can officially declare: the crypto bear market has ended — we are in the bull market.

Outburst of positive developments

So many positive events occurred in April that it is hard to keep up with all of them. To mention the most notable ones: Facebook is reportedly seeking up to $1 bln venture capital funding for its crypto project; a survey by Fidelity discovered that 40% of the institutional investors plan to invest in crypto in the next five years; Binance launched a decentralized exchange; Societe Generale issued bonds on the Ethereum blockchain; Forbes published a list of 50 large corporations most active in utilizing or testing the blockchain technology, including the companies like Allianz, Amazon, Walmart, Facebook, Mastercard, Microsoft, and Nestle.

As I explained in my December monthly commentary, 2018 was the most active year for crypto in terms of development — and the current outburst of positive events is the result of that. We can expect much more positive news in the coming months which will propel the prices higher.

Conclusion

It is evident that we are in a bull market, however, the current momentum — also taking into consideration the new developments in May — suggests that a market correction is imminent. That being said, I believe it is best to stay long in the coming months. An average investor is terrible at market timing and, in fact, so are various fund managers, analysts, forecasters, and other experts. None of them can accurately predict the market movements, especially over a longer period. Getting out of the market is the easy part but investors tend to ponder too long on deciding when to re-enter the market. They miss out on a lot of gains this way and the more times they exit the market, the more they underperform it.

Keep calm and HODL.

 

 

Solidum Capital also manages the Solidum Prime Crypto Fund on the ICONOMI platform. You are welcome to read the Solidum Prime Monthly Report for April 2019 and why now is the best time to invest.

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DISCLAIMER: This article is for informational and discussion purposes only and does not constitute a marketing message, an investment survey, an investment recommendation, or investment advice. The article was prepared exclusively for a better understanding of market dynamics.

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