Cryptocurrencies are continuing their post-tax-day gains with Bitcoin above $8500, Ethereum at almost $600, and Ripple up over 30% on the week.
With Bitcoin back above $8,500…
And Ethererum is back above $550 – testing towards $600…
Certainly, for now, the anecdotal performance suggests Tom Lee’s tax-based-selling these is playing out with strength continuing, but, we also note that The Sovereign Investor believes the most important crypto indicator just turned bullish.
As the crypto asset class evolves, similar patterns and indicators used by traders in other asset classes are emerging.
One of these is the tendency of markets to be in either “risk on” or “risk off” mode.
Investors are either willing to take on more risk through buying riskier assets, such as tech stocks with little to zero earnings; or they are looking to take less risk, adding either gold or U.S. Treasurys to their portfolios.
As the oldest and most liquid crypto asset, bitcoin is considered “digital gold.” It can be exchanged for more altcoins than any other crypto and serves as the main entry and exit point to fiat currency.
On top of that, there are thousands of merchants that accept bitcoin as payment, providing users another exit to the crypto markets.
Bitcoin has been able to maintain crypto hegemony even through significant faults: Transaction speeds are much slower than rivals, and fees tend to skyrocket when the network is busy.
Many contenders have tried, but none have successfully replaced bitcoin atop the crypto throne, and it remains the “store of value” within the crypto asset universe.
This unique position allows it to outperform other crypto assets when investors are moving away from risk. As the crypto asset class evolves, similar patterns and indicators used by traders in other asset classes are emerging.