This week we finally got to see BTC break the $9,000 barrier. Though it was expected to find strong short term support around $8,300-8,500, the panic selling scenario put forth played out instead. While the support did hold, sellers were given full control and it was easy to break below the barrier.
Bitcoin traders and investors should actually be relieved. A corrective phase is not something you want to be played out quickly, because the entire point is to allow the bears to wear themselves out. Considering how lengthy and deep this correction is, this is an incredibly healthy sign for the coming bull market.
In all honesty, Bitcoin has never truly corrected like this. It is becoming increasingly clear that the market is infinitely more mature than it has ever been. The sheer ‘bounciness’ of this correction stands as evidence for this as Bitcoin continuously moved according to classic behavioral patterns before.
We expected ETH to have started its bull run considering it had taken on a deeper correction than Bitcoin, and that too, to levels that were incredibly strong liquidity zones. However, the correlation to BTC and the sheer dominance of the Bitcoin sentiment that is thrust upon altcoins was undermined; lesson learned.
Nothing the market does this week should surprise us.
Well, it has been pretty much confirmed that the broader market is just going to follow BTC, so it is time to take one eye away from altcoins just until the market actually consolidates and moves up with healthy volume.
Expecting some upside to mid-8,000’s as buyers increase order-book pressure in the short term. That region will entice more sellers to enter and give us the second leg down.
Honestly, we’re expecting BTC to bottom and consolidate in the green box below current price action (7,400-7,600). But a new wave of FOMO sellers could push the price lower and increase sales volume.
Spotting the reversal will not be easy, but the most reliable indicator for that is undoubtedly volume. Volume alone can tell you a lot about market sentiment and which direction the trend is likely to move up. Trend reversals are set in stone by volume reversals.
We were not expecting ETH to fall once again, especially after breaking its most recent lower high. However, the effect that BTC has on the market was severely underestimated, and those who did, paid dearly for it.
For this reason, we’re not too worried about finding the ETH bottom, although I speculate we go no lower than $125. DCA-ing into ETH at these regions would be one of the more higher risk-reward plays for the next year or so.
Volume on ETH was incredibly bearish. This alone indicates a minimum of one more leg down, to at least $143-150.
Once again, nobody understands what exactly XRP is trying to do. It wiped out its gains in no time relative to other altcoins and made its yearly low just a few days ago.
Depending on when the next drop from Ripple escrow to the open market is, we could see an XRP price of $0.19-0.20 or even less. Current price structure is indicative of a small wave to the upside followed by a roar to the downside.
Just to reiterate, XRP has peculiar economics and a very manipulable demand-supply schedule owing to Ripple’s ability to continuously create new tokens (technically already created, just pulled out of a lock-in).
This month is going to be incredibly crucial for BTC, and the rest, as it will set in stone a strong region of support that is likely to never be seen again. Averaging into spot positions will be immensely more fruitful than trading right now.
With the rampant volatility making a comeback, it’s important to understand two things: any trade requires more conviction that it would usually take in order to be viable, and the only way to own a winning position in such environments is to play with wide stop losses i.e higher risk; so it’s better to wait on the sidelines for confirmation.