This week was slightly more bearish in relation to the last week, but there hasn’t been any significant volume to offer any broad directional perspective on where we are headed. All in all, anyone who has been reading this market update for the last few weeks will know we’re still very much expecting to see another move down. But in that case, you also know that when people get overly bullish/bearish, we like to take the opposite side of that sentiment.
Once again, most long-term retail participants are in the range of uncertain sentiment. Almost everyone expects a move to $7,400-7,600 on BTC, which is leading us to believe the market is in for another relief rally before falling.
ETH and other altcoins have done just fine. To be honest, their price action is nothing surprising or extraordinary. In times like this, it is important to put a majority of the focus on BTC. As the most liquid asset in this space, it essentially serves as a representation for broader market sentiment. Whether you like it or not, in the eyes of the market, BTC is king and serves as a yardstick for cryptocurrencies on the whole.
Altcoin illiquidity is both a blessing and a nightmare. It’s a blessing because it means there’s more room for explosive price growth; a nightmare because accurately trying to figure out majority market sentiment and estimating price discovery are, both, close to impossible.
In any case, given the dependence on BTC, ETH, and XRP, this market review will slim down by focusing on these three coins and their demand-supply mechanics.
BTC has seen multiple consecutive daily closes below $8,050, which is quite concerning to those in leveraged longs at the moment. Just yesterday, BTC retested $8,050 but ended up creating a massive wick. This shows us that short term sentiment is indeed bearish as buyers didn’t show up at this level, even though market trades (rather than setting limit orders at strong levels).
However, there is a trend in BTC to short term explode to a region, wick out, and gradually move back up to that level with healthy candles. Keeping this in mind, we do see the potential for upside gain in the coming days. One sign that will confirm the relief rally to us is two consecutive daily closes above $8,200. Following this, a breakout above $8,600 and a close above is akin to a riskless long to $9,000ish.
It’s important to understand long time frame context too. BTC has room to go to $12,300 without even breaking a lower high. This means there’s A LOT of room for volatility to play out, albeit it is unlikely we reach this level before bottoming out.
Keep an eye on volume. It will depict sentiment. Volume always precedes prices.
ETH is currently in a make-or-break kind of region. It has been for the last week. The levels you see below ETH’s current price are crucial in ascertaining the current wave structure for the coin.
A scenario where the second region breaks will result in massive panic selling, but a strong, strong bottom where the price will simply explode from. However, if ETH can manage to find strong support here, it will go a long way helping accumulate volume. On-chain metrics play a crucial role in understanding investor sentiment in a more nuanced manner.
Personally, we think it can find resistance at $158-160. While we can’t rule out price crashing below this due to FOMO and panic sells, volume from this region has been strong in recent months (meaning it is a zone with high liquidity). Breaking $151 is what’s dangerous in my opinion. Keep a close eye on wicks.
wet seems like XRP is just one small push to the upside away from a massive dump. Though we have to admit, price action looks very, very strong. Ripple’s Q3 insights report has painted quite a vivid picture. The company has taken heed to community calls to reduce the number of tokens they dump in the open market.
The company has taken to this, reducing its net sales in the open market by a whopping 77%. This has obviously helped demand outweigh supply, but given the reliance on these sales for the company’s prosperity, it is unknown just how long they can afford to keep this going.
A breakout and weekly close above $.317 will be incredibly bullish for XRP. A run to $.42 will be on the cards at that point. More likely, XRP rejects this level as resistance and makes it way down to $.27.
At this stage, we are questioning whether $.19 is actually going to happen, or whether XRP has sufficiently bottomed out. In any case, it isn’t for us – or even the market – to decide. It is all up to Ripple Inc. and their need to suppress the price through orchestrated dumps.