Stocks came under more pressure today and they’re not alone. The Cryptocurrency market has also continued to make new YTD lows in 2022. The total crypto market cap has declined more than -35% from the November ’21 all-time high, more than -$1 trillion value lost. Fear is running rampant. Many investors are calling for a “crypto winter” and drawing comparisons to the -70% decline seen in the first quarter of 2018…Is it really time to panic? LikeFolio data suggests that the “sell everything” strategy might be a bit premature. For one thing, crypto investment Mentions are at an all-time high level, up +59% QoQ on a 90-day moving average.
It’s worth mentioning that past ATHs for this metric proceeded the two largest crypto market pullbacks to date. However, both the prior highs were isolated phenomena — Crypto Investment mentions AND the crypto market cap had exploded higher after years of consolidation.
This time around, only 6 months have passed since the last high, which puts us in uncharted territory. Looking at the market leaders, Bitcoin ($BTC) and Ethereum ($ETH) only reinforces the relative strength seen in investment mentions
In a drastic departure from the bubble-like spike seen in 2018, Purchase Intent Mentions have maintained relative stability since the run higher in 2021. Bitcoin PI is still showing strength: +4% QoQ and +34% YoY on a 30-day moving average Ethereum looks equally (if not more) impressive.
ETH’s Consumer Buzz made a massive leap in 2021 and it’s still holding higher, up +18% QoQ and +260% YoY (30d MA). Both coins are stubbornly defending key levels too — BTC @ $40K and ETH @ $3K. A break below for either would certainly result in more selling. But considering the hitherto unseen levels of attention, these assets are receiving, we are just as likely to see a rally off these levels. Regardless of the near-term price action, LikeFolio data shows that there’s nothing to be panicked about yet.
Throughout the short history of cryptocurrency, accumulating while the broader market is fearful has been an incredibly profitable strategy…Simply buy with a plan to hold long-term and don’t use leverage!