• Mini Flash Crash and Recovery of BTC and ETH
• Crypto Fear and Greed Index: Nearing Extreme Fear 
• Signs of Leadership: MATIC’s Resilience
• MATIC Recommendation: Buy the ATH Breakout

Mini Flash Crash and Recovery of BTC and ETH

The cryptocurrency market has been in a whirlwind of volatility since the beginning of the month of November. Major cryptos like Bitcoin (BTC) and Ethereum (ETH) touched new all-time highs before a seemingly healthy pullback turned into a sudden mini flash crash last weekend. 

Bitcoin (BTC) fell more than 20% in one day, hitting a low of $42,000 before recovering most of the losses that same day. Similarly, Ethereum (ETH) fell about 17%, to a low of $3,503, before it rebounded too, taking back most of its losses that same day. Most altcoins followed suit and tracked major losses, some losing more than 30% in a day. 

Crypto Fear and Greed Index: Nearing Extreme Fear 

The Crypto Fear and Greed Index showed a drastic decline towards extreme fear at the start of October, when Bitcoin showed a bearish double top pattern and could not break the major psychological resistance level of $70,000. The said index tracks volatility, market momentum/volume, social media, dominance and Google trends, that enable us to understand the current crypto market sentiment. 

Currently, it is at 29.00 which is nearing “Extreme Fear” levels which could be as a result of the recent heightened volatility. It is noteworthy to see that just last month, before the market correction, the Fear and Greed Index showed “Extreme Greed”, when it hit almost 90.00. At the current levels, it would seem that there may still be room for more pain in the markets before a possible relief rally. When the index shows “Extreme Fear”, it could present a good buying opportunity. 

Signs of Leadership: MATIC’s Resilience

Polygon (MATIC) also fell more than 30%, trading from a high of $2.317, to a low of $1.547 in one day. Tremendous overall market volatility shows who the true leaders are. MATIC rebounded and recovered strongly over the next few days, even hitting 6-month highs at $2.579. This type of resilience coming from a crash shows MATIC as an emerging leader in the cryptocurrency space. As most coins have been correcting and slowly turning bearish, MATIC has continued to move higher and higher, towards all-time highs. 

MATIC: Daily Log Chart shows a clear uptrend, supported by the 200-day moving average

MATIC Recommendation: Buy the ATH Breakout

MATIC has formed a clear 6-month long large pennant culminating towards all-time high levels. Currently, it would seem quite extended already, as indicators are showing a little bit of weakness. The momentum indicator, ADX, is below 20, which suggests that a consolidation above $2.00 is most likely. 

Ideally, what we would like to see is a tight consolidation and lessened volatility before breaking out above ATH levels of $2.60 to $2.70. Watch out if it fails to break above the ATH – if this happens, sell half immediately, as this would form a bearish double-top for MATIC. 

Trade Idea

           Buy: $2.60-2.70 as it breaks out

           Stop: $1.60-$1.70 (this negates the trade idea if MATIC falls below this area)

           VAR: Risk only up to 1% of your portfolio in this trade, buy in tranches