Quiet Moment on Cryptos – After several months of declines, cryptocurrencies are stabilizing. Ethereum manages, for the moment, to keep the psychological round number of $1,000. As The Merge approaches, the altcoin leader does not seem to be able to change the dynamic. The economic context is not in favor of risky assets such as cryptocurrencies. Spain has inflation above 10% over one year, a level that has not been reached for 37 years. In this inflationary environment, cryptocurrencies are struggling. Could it be possible that the altcoins will recover in the short or medium term to try to rebound during the summer and end the year in style? Let’s take a look at where the altcoins are!
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Ethereum fights against Bitcoin: reintegration of the range?
The graph of Ethereum against Bitcoin allows to know the strength of Ethereum and it gives interesting clues about the cryptocurrency market. Indeed, in a bull market, Ethereum will tend to outperform Bitcoin while in a bear market, Bitcoin rules:
A few weeks ago, the situation did not look like 2018. Today, it is clear that it is possible that the market is entering a multi-year bear market. As we can see, the bearish trendline had pushed the price back during the entire period of bearmarket. A new bearish trendline has formed weekly and we will have to remain cautious as long as it rejects the course.
The price of ETH/BTC could be in a tidy weekly. The exit from the top range (purple) could only be a DETOUR like the exit from the bottom that the price is currently experiencing. For now, there is no confirmation and the course can totally be done dismiss at the level of resistance and fall to find the next one support. Ethereum must hold to keep hopes of bullish continuation against bitcoin. Otherwise, the bearmarket could continue for a long time like in 2018. No one knows how long a bear market can last.
The momentum is always bearish and below the downtrendline. There again, it will be necessary to free oneself from it to find buying force.
Altcoin capitalization stabilizes at the support level
The capitalization of altcoins is bearishbut the course is currently at the level of a support. Buyers will have to defend themselves:
A few weeks ago, capitalization gave a bearish signal by changing momentum then in breaking weekly support. The course is currently at the level of support corresponding to the 2018 ATH. The bulls need to defend this support to avoid going back to the lower support level. This would lead to an additional drop of 45% on average while some altcoins have already lost 90% since their high in November 2021.
The price is currently below the bearish trendline and as long as this is the case, it will be necessary to remain careful. Momentum is also bearish, and this, for already 6 months. the momentum is in the hands of the bears and there is no sign that this will change quickly.
The dominance of Bitcoin: signal of the end of the rise?
The dominance of Bitcoin lets know where is the capital going. After a largely bearish 2021 where capital was heading strongly towards altcoins, players are more chilly and reduce their risk :
Dominance is in a tidy described by the lower bound at 40% (green) and the upper limit at 48% (red). The exit from the range will give the direction of the market. A bullish exit would be negative for the market as it would show that players no longer want to invest in altcoins and now want to lower their risk. A breakout from below would seem exceptional for altcoins, since it would be a strong bullish signal for altcoins. Both scenarios are shown on the graph with corresponding colors.
the stochastic is a powerful momentum indicator that can give clues about the start or end of a move. The differences at the end of 2021 showed that it was possible that Bitcoin could regain control sooner or later and it happened. Currently, the stochastic is in the process of cross bearish. Historically, this has brought decline in dominance.
If the signal is confirmed, it could bring the dominance close to the support. It would be the fourth time support would be hit and there is a high probability that the support will give way. We will have to follow this closely in the weeks to come.
Altcoins remain shorted by the market!
For several months, the actors have been in the process of short altcoins :
The funding rate is a very interesting indicator for knowing the actor behavior. In derivatives markets, the funding rate of altcoins is negative. This indicates that actors in shorts pay a fee to be able to stay in position. It is generally during these periods that the whales do the opposite to avoid paying fees. For large wallets, not paying fees makes a significant difference.
It does not give a timing, but this information shows that the actors are very bearish concerning altcoins and this could lead to retracements in the next weeks. It is not impossible that this could allow altcoins to regain color during the summer.
Altcoins have been clearly turning bearish for several months. Ethereum is trying to hold onto the $1,000 threshold and remains feverish against Bitcoin. It is imperative that Ethereum quickly reintegrates the range against Bitcoin otherwise the fall is likely to continue. The dominance of Bitcoin remains encouraging. This must return to the support level to hope that the capital flows massively in the direction of the altcoins. The market is still uncertain and the macroeconomic context is still in favor of safe-haven assets such as gold or the dollar. It remains extremely risky to buy altcoins currently, as the market may have entered a long bearish period. Keep in mind that altcoins can lose 90% several times, or even disappear.
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