The Altcoin Bear
Today we will shed some light on the long-term bear trend we have all seen in in the altcoin market and where to pay particular attention.
Hint: The turning point for the market is dependent on an old friend hitting a certain price point.
Ok, here we go… hodl tight!
Bitcoin (BTC) is in the spotlight right now. Since dropping to $6000 in February it has been steadily rising; yet the altcoin market has almost flatlined. The gap between them is widening and the price of coins relative to BTC is declining as they are left behind.
The following chart shows the last three months of the combined crypto market excluding Bitcoin. Take note of the black box in the volume chart at the bottom to see what we mean by “flatline”
Bitcoin is rising and getting stronger, what’s holding back everyone else?
The short answer: Confidence.
Confidence in the form of the $12,500 mark.
Bitcoin passed that key point for the first time in early December triggering a euphoric reaction; Lambos were set to be that holiday’s Tickle-Me Elmo. What people failed to notice is that while BTC roared forward the altcoin market did not follow. Here is BTC blasting through $12,500. (Black rectangle on the left)
What did the altcoin market do at the same time? Look at the arrow on the left: fizzle.
At this point you’re probably thinking “You said $12,500 means altcoin euphoria?! What am I missing?”
The short answer: Confidence.
Scroll up two charts to Fig. 2 again. Note the black box on the price of bitcoin extended into mid-December. The price of BTC sank back down to $12,500 again and bounced up.
Now that’s a resistance point; BTC was given the golden ticket to reach new highs. This price support defined the bottom of the price range and gave a signal to the world that it could only go up.
Now CNBC could get involved and crypto became mainstream. My barista started detailing how great TRON (TRX) was, my barber went on about how Ripple (XRP) will be the next BTC (causing me to jerk hard enough for him to carve out a decent chunk of my hair), and for my neighbor to say he had just maxed out his cards to buy Ethereum.
Now that is confidence in the market.
With this confidence, altcoins boomed. Going back to Fig. 3 the area slightly right of the black arrow can be viewed as the time we departed for Saturn. What a way to end 2017…
2018: The New Year… bottles poppin’, champagne flowin’, hopes flying high. Resolutions made. “I will retire in 2018!”
BAM! Reality. The market was overpriced. Mid-December saw an all-time high for BTC. From this point forward, the bear trend had started, but nobody told the altcoin investors. Altcoins were still enjoying their time in the sun. They had all the attention. The only issue was that bitcoin began approaching $12,500 again. It hit, but this time support broke.
“Houston, Saturn is a no go. Repeat, Saturn is not in our sights, we are not leaving the stratosphere… we are falling back to Earth.”
BTC price jumped back up over the line momentarily but there wasn’t enough resistance. It stalled, hovered, then plummeted. BTC was spiralling and the crypto community was waking up.
Look at the thick black line on this chart, that’s our magic number.
Altcoins followed but at a much steeper pace. This chart looks almost the same as the last but the slope is stronger.
The conclusion here is two-fold:
1. When BTC goes south, the altcoin market doesn’t just follow, it outpaces BTC on the way down.
2. When BTC is confidently above $12,500, the altcoin market will most likely turn around and begin to rise.
Therefore, based on the history of this extremely young market, the altcoin bull will not rise from the ashes until BTC regains our trust by showing it can stay above the $12,500 mark once again.
Coincidentally, my next haircut is scheduled for the 20th of March. I am looking forward to hearing about the tech behind TrumpCoin, who the “next BTC” will be, and the ICO that is guaranteed turn a minimum wage paycheck into an Italian sports car. Hopefully no divots in the fresh shape-up this time around.
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