What next after the 20% drop?

After BTC briefly reached a new all-time high last week, the market reversed over the weekend and lost ~20%. Several elements are credited for the drop: euphoria in the futures markets, high leverage levels, BTC hash rate drop, fake news, etc.

While nobody likes to experience these selloffs, they are part of the normal crypto market dynamics. Despite being a very volatile asset class, crypto is flush with leverage, and consequently, we occasionally experience higher volatility. It is entertaining to observe that nobody has any problem with upside volatility though.

So, what happens next? In the chart below, we compare the March 2020 drop with the current one. We expect the market to move sideways for some time, but eventually, the prices will continue to appreciate (click on any image below for a larger version).

BTC-USD

Nothing has changed fundamentally: the bull market is still here, the altcoin season continues, so this drop is a great opportunity to increase existing positions. We added a substantial amount from our company treasury to our strategies after the recent drop.

Market overview

In the past, March has predominantly been a bearish month for the crypto market. However, this year, with positive news surging each week, the crypto market ended the month with a positive performance of +31.44%.

Chart 1 - Crypto market performance (2021-03)

Nearly all top-25 crypto assets by market cap recorded a positive monthly performance in March, with the exception of Cardano (-9%). The top three performers were Filecoin (+432%), BitTorrent (+352%) and Theta (+295%). Bitcoin and Ethereum both posted mid-range returns of +31% and +35%, respectively.

Chart 2 - Top 25 assets by market cap performance (2021-03)

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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.