The crypto bull run looked to be in full flow last month, but Bitcoin and the entire cryptocurrency market seem to be in a clear downward spiral at the moment, with altcoins continuing to trade well below expected key levels.
However, should traders and investors really be worried? After all, aren’t these kinds of retracements welcomed by enthusiasts to make new entries?
Let’s take a quick look at the market and see what’s going on with the top coins. My goal today is to look at the top altcoins and how they’ve been trading against Bitcoin, as one of the most widely-used strategies by traders and long-term investors is to purchase fundamentally-sound altcoins in order to switch them back to BTC at a later date.
Let’s take a look at how Bitcoin has been doing before we jump into the major alts.
At the time of writing, Bitcoin (BTC) is trading just below $9,530 after falling significantly following last week’s mild recovery, which took BTC back above its 20-day EMA.
Bitcoin fell from $10,000 in the week to as low as $9,000 during the weekend before powering back above $9,500 in the space of a few hours on Sunday.
What I expect to happen is for price to bounce between $9,000 and $11,000 before making its way upwards again towards the $12,000 and $13,000 levels and above.
Even though the trend is our friend, there is the potential for significant retracements that would see price touch or even drop below Bitcoin’s 100-day EMA. Remember that in the previous bull run, price retraced between 30% to 40% a few times before reaching all-time highs.
Volume seems to be following the downtrend as well. Over the past month, volume has gone from $20 billion to $27 billion and is now sitting around $14 billion.
Bitcoin may have had a bad time recently, but Ethereum has fared much worse. Since May, ETH has lost about 42% of its total value vs BTC, going from 3,100,000 SATs to 2,100,000 before recovering back to the 2,200,000 region. Depending on how BTC performs, we can expect ETH to follow.
Looking at the chart above, we can clearly see that ETH has been on a massive downtrend since it touched its all-time high in early 2018, when it was trading around 12,000,000 SATs.
Although ETH could go further down in price against BTC, by looking at the volume profile, I argue that is quite unlikely. As far as I’m aware, most early investors and traders have sold most of their ETH holdings and now seem only interested in buying more at cheaper prices.
If we were to assume ETH could return to its early 2018 value vs BTC, Ethereum would need about a 5.45x jump from where price is sitting now – meaning you could still potentially 5x your BTC if you bought at current prices and sold near new all-time highs.
Litecoin, one of the top performers of 2019, hasn’t been able to sustain its yearly gains, and it has finally come tumbling down below most of its EMAs – much like Ethereum and other altcoins.
At the moment, LTC is already trading below its 200-day EMA at around 9,300,000 SATs. Just a few weeks ago, during mid-June, Litecoin was trading above its 10-day, 20-day, and 100-day EMAs at around 17,500,000 SATs. In essence, the coin has lost over 50% of its value against Bitcoin in around a month.
As I mentioned with Ethereum, there’s not much to say given the rising influence of Bitcoin’s price on the market. My hope is that this is just a momentary dip, and investors will take this opportunity to make new entries.
If Litecoin is able to gain some momentum and return to at least its 100-day EMA, that would indicate the altcoin market is looking to recover. Until then, I would use the same strategy as with ETH, given LTC could grow about 2x from where it’s currently sitting.
Bitcoin Cash has also been hit hard by this sudden move downwards in the market. Its price, which was trading above 5,000,000 SATs just last month, is now just above 3,200,000 SATs, with BCH losing close to 40% of its total market value in just a few weeks.
Although BCH has been one of the worst performers of the top coins, it is still quite far away from its all-time lows of close to 2,500,000 SATs.
Looking at the chart, we can see price is trading below all its EMAs, even though volume-wise BCH is still supported by a massive wall between 3,000,000 and 3,600,000 SATs. As long as BTC recovers, I expect BCH to do the same as investors and traders will be looking to ride the trend upwards, much like we saw with LTC earlier this year.
Ripple (XRP) is now close to its all-time low of around 1,300 SATs, and it is currently trading below all its EMAs – a sign of great weakness. If XRP breaks down lower from where it’s sitting now – close to 3,300 SATs – I’m not entirely sure we’ve seen the bottom for the coin, as there’s plenty of room to go down even further.
Investors should be wary of making new entries as the market is currently under turmoil, and the coins that usually take the hardest hits are the ones on a clear downtrend – like XRP.
Hopefully, if Bitcoin recovers, XRP will soon follow. However, for the moment, I’ll keep watching the price action for a sudden tell.
At this point, the market could either go up or down, and it all comes down to BTC’s performance. As we know, its dominance is growing by the day, meaning its impact on the entire market is also increasing. Let’s hope BTC can push the rest of the market upwards.