Cryptocurrencies volume rising…

Last time Cryptocurrencies had so much volume in the last 24h (31.8B), Total Market was around 400B and Bitcoin price near 9K.

Still premature to call this a definitive bottom, especially when we are very near a diagonal resistance but we want to see the volume rising with price moving higher for confirmations.

Ethereum Monthly Chart Idea

Ethereum is one of the most relevant cryptocurrencies for many reasons, some may argue that EOS, Tron, Ada, NEO or whatever are better versions but none of them have the community Ethereum has. The amount of resources and developers using Ethereum is just impressive and not matched by any other project (not even Bitcoin). Nevertheless charts don’t care about such things…

ETH/BTC Monthly Chart clearly shows a major correction in ETH history. Since inception ETH formed a nice uptrend broken in this Bear Market but the good news is that ETH/BTC finally seems to be pushing above the support. If ETH remains above 0.035BTC for this month we may even retest the top of this TR (Trading Range) this year. Probably sooner than later but we have at least two major resistances, one between 0.04-0.045 and one more near 0.07, each one if and when broken should trigger more FOMO.

Zooming from the Monthly to the Daily we have this very interesting break and we may also have a Golden Cross (50MA – yellow, crossing the 200MA, red)…

Bitcoin Monthly Chart Idea

Monthly charts are so underrated lately, I need to publish one…

At the moment we have a local Bottom in formation entitled Support 2. This Support may be the Bottom of the Bearish Market or not but keeping an eye on this should be valuable.

As a side note, notice that one of the major differences between this Bear Market and the one we saw in 2014 is the fact that we don’t have a mid Support between Support 1 and Support 2 since the fall from the top of the channel pushed us directly to the bottom. Nevertheless we have a support/resistance around 4800 made previously (while the market was still Bullish).

Bitcoin Valuations

Yesterday Willy Woo published one more chart, entitled Bitcoin Valuations, with various valuation metrics. This chart is useful for checking how the market is behaving considering some of this valuation metrics nevertheless it will not tell the future as many would like (nothing will). This chart includes, Market Value, Realized Cap, Thermo Cap, Average Cap, Delta Cap, Top Cap and NVT Cap but he didn’t include the Fair Value Market Cap, available on coinfairvalue.com.

Bitcoin Price Vs Fair Value

As we can see on this chart the Fair Value is indicating a bottom in formation, not meaning the Lower Low is already achieved, but eventually meaning we reached the last consolidation phase of the Bear Market (It can last months also confirming other valuation metrics).

Besides this valuation metrics we can also use more indicators like the Mayer Multiple or modified versions of this. For instance in the bottom of the following chart I combine a Major Mayer Multiple (using the Total Market Cap instead of BTC) with Bitcoin NVT and both (in this time frame with this parameters) confirm my previous assumption.

Supports and Resistances

One of the most undervalued concept in trading is the notion of support/resistance. We have plenty of support/resistances, we can draw horizontal or diagonal lines (and patterns), we can use moving averages and so on. Nevertheless, many traders keep “ignoring them”.

Weekly BTC with 3 Moving Averages and some Resistances/Supports

The simple reason for that is because they keep trading/investing in the belief this support/resistance will break. Why? Because it’s well known that each support eventually will turn into a resistance and vice-versa. First of all, each individual is different. Some like to trade in counter trend and some will follow the trend. Knowing what type of investors/trader you’re is the first step to build a strategy based on that behaviour.

For instance in the following example (considering a mid/long term investor, more than 3 years) a counter trend investor may buy on “A” (also considering the long term trend as Bullish) and a trend investor will wait for a definitive trend and may buy on “B”. Both choices make sense if you have a proper risk management and if you keep aware of the market cycles. Cryptocurrencies are very volatile and speculative, if you don’t follow a strategy, diversifying and investing gradually, you will lose money for sure.

Trend Investing and Counter Trend Investing example

Conclusion & Recommendations

  • Never forget the big picture (weekly/monthly charts)
  • Invest/trade avoiding emotions
  • Follow a strategy
  • Keep in mind your risk managment
  • Keep learning

Despair and Frustration or Something else?

While many sold Bitcoin at major losses in despair and frustration (and even panic), because not everyone can endure this kind of Bear Markets, it’s now a fact that institutional investors keep stepping in silently.


FIGURE 18: GRAYSCALE INVESTOR PROFILE BY TYPE – Q4 vs. 2018

Grayscale Q4 2018 report is revealing about the inflows made while price was lagging or moving down. As we can see in this report more funds got injected into BTC when price broke major supports, for instance bellow 6k.


FIGURE 3: GRAYSCALE TRAILING 12-MONTH INFLOWS AS % OF TOTAL AUM SINCE INCEPTION8

Alt Coins Market Cycles

Besides all the fundamentals something great about cryptocurrencies is transparency. We have so much data available to produce good information it became fascinating. Not all the information produced is good but we need to start somewhere and improve.

Something I noticed, and I’m not the only one, is how alt seasons happen in a recurring way. Since bitcoin remains the dominant cryptocurrency and it may continue to be for many years we can observe this cycles just looking at the BTC dominance chart.

Bitcoin Dominance 2013-2019 – charts.cointrader.pro

In this first chart we notice that BTC is losing Dominance over time and we can also see five major alt Seasons, each one different in many details but all of them quick (between 1 and 4 months) and sharp (between 220% and 2300% increase in market cap.).

Bellow each one is listed in duration and proportion but the previous rise (when present) due to BTC increasing in dominance is ignored.

Duration…

  • #1 – 90 days
  • #2 – 125 days
  • #3 – 60 days
  • #4 – 110 days
  • #5 – 35 days

Alt market cap rise…

  • #1 – 1800%
  • #2 – 220%
  • #3 – 250%
  • #4 – 2300%
  • #5 – 280%
Bitcoin Dominance 2017-2019 – tradingview.com

In both charts we have a descending triangle in formation for the last 150 days suggesting a new alt season when, and if, this pattern breaks on the downside. Nevertheless this recurrence shouldn’t be considered alone and we can’t forget that the dominant market trend remains Bearish.

Any alt season attempt in a Bear market tends to be short lived and reverted however a Bear market can start bottoming with an alt season. For instance Q3 2014 signalled the bottom for alts and BTC only reached the bottom in Q1 2015.

Bitcoin vs Alts, 2014/2015 Bottom as example

Why?

I’m aware of Cryptocurrencies (Bitcoin) since 2015 but only started investing and using them in 2017. Since then I learned a lot and found many useful resources but never had a place where I could aggregate and share everything I like.

It’s all about money…

In this blog I will share some resources, analysis and more in hope that everyone will enjoy and share even more. After all we live in a sharing economy, where almost everyone and everything is connected…

Not yet but in some decades everything will be!

Note: This is a work in progress and even the page layout can radically change in the next weeks.