BTC pushed higher quite well this year, nevertheless the Bullish momentum vanished and we entered a longer consolidation period. If we use larger time frames we can see some similarities with past price action but not exactly in the same scale/proportion.
In 2016 BTC tested the 3Day 200MA without crossing down the 3Day 50MA and this year we trade between this two Moving Averages for some days (more than 20). This situation could be more dangerous but we can’t forget the Halvening in May 2020 (7 months left). We can still cross down the 3D 200MA but odds that we will see a stronger reaction/bounce after testing that MA are higher than many may think (or not, nothing is granted and we may not even test that MA).
For some it’s time to turn Bearish and start shorting and closing all their longs, for some others it’s time to start buying more BTC until we test the weekly 50 MA yellow, (or not, since we don’t usually kiss that MA).
from here we can expect to test another lower low, eventually something between
6.8k and 7.5k but it may not happen if Bulls take control sooner than “expected”.
Waiting can be boring but many times it’s the best we can do… Alts Market Cap failed to bounce and dipped quite hardly after testing the Daily 200MA. Nonetheless, this dip doesn’t mean we go down from here, probably many Stop Losses got triggered and at this point almost all long leveraged position are liquidated (non-existent) providing less fuel for Bears.
What Bulls want to see now is a strong support like previously mentioned. If we hold here for two or more weeks it means Bulls are finally in control and they will catch any lower low without hesitation (like some already did with this one).
Historically we already saw something quite similar when the previous Bull Market Started…
Alts Market Cap will probably test the Weekly 200SMA (near 65B Market Cap) before pushing higher. All attempts failed and probably will continue failing until we test the Weekly 200SMA. We have a small probability to bounce at this level but the weekly candle (after this last failure) suggest weakness and more downside for the next 2 weeks (or more).
Alts Market Cap is potentially forming a descending broadening wedge but it also faces the fact that the daily 200SMA (red line) may not hold in the current conditions. BTC continues to rip alts and we can’t be sure where or when it will stop. Again my Bullish sentiment is more inclined for an alts season starting in the next 2 to 4 weeks but I can be wrong and alts may keep going down.
On the short term ETHBTC is testing new Lows but how about mid and long term?
Monthly chart shows something interesting and it eventually gives us some clues about what may happen if some conditions are met. First of all my mid/long term sentiment is Bullish and will remain Bullish unless we start breaking some “strong” supports (0.011BTC or 0.008BTC for instance). That said, ETHBTC is near two major supports, 0.018BTC on the monthly and 0.016BTC on the weekly. Considering the fact that ETH fundamentals (transactions, network activity, and so on) aren’t dropping we can expect them to increase as soon as we have some positive price action. Market is very cautious at the moment because everyone seems afraid of BTC achieving new local lows (8k or less) but if it doesn’t happen this month price will not lag forever.
Nevertheless if the market gains more confidence and ETH holds at this levels closing the month near 0.016 or 0.018 and if we have a bounce in the next month that bounce may signal the beginning of a strong reversal. Never forget that corrections are slow and boring, but Bull Runs can last less and move fast. The monthly chart clearly shows 6 big green candles and plenty of small red candles (ignoring the first 2 months).
If we consider the fact that Binance (one of the major exchanges) is 30 days away from blocking all U.S. customers from the regular exchange (where many alts are traded) the fact that BTC dominance is again near another local High shouldn’t be a surprise. Nevertheless the big question remains the same when and how strong is the next Alts Season (since all attempts to start one failed).
At the moment, it’s hard to guess when since we don’t have strong patterns playing out and also because the bounce on many BTC pairs is now vanishing with some of them already reaching new Lower Lows. On the other hand BTC may test the top of the short term downtrend and if it breaks out from that channel alts probably will suffer a bit more. Best case scenario Alts may finally start recovering after September 12 but nothing is granted. After all, BTC and Alts may keep lagging until October/November or they can do something else.
One of the multiple scenarios for Alts Market Cap is something like in the next chart.
If alts want any sort of comeback they need to leave the white trading range with strength/volume. On the other hand if we breakdown this white trading range or if we retest the top and fail we should expect an increasing sell pressure and more downside.