Bakkt Warehouse custody opened yesterday, as users were able to deposit Bitcoin funds into the accounts. However, minutes after the tweet announcing the opening, the price of Bitcoin dropped by $700.
Bitcoin reclaimed the $9,800 level as support and began to rally upwards to the massive resistance zone of $10,800-11,000. Not only a horizontal area of resistance but also a downtrend line was facing up. More interestingly, the moment that Bakkt tweeted their opening, the price fell from
$10,900 to $10,200. A typical example of the concept “Buy the rumor, sell the news” in which traders and investors purchase an asset demanding a positive result from a specific event in the future. But, when the actual event takes place, mostly it doesn’t influence the price, and the price falls back off to the original levels.
During 2017, this was a widespread phenomenon with altcoins making announcements, causing the coin to go up. Another notable instance is the splitting of Bitcoin and Litecoin. Previously, their prices went up before the event while dropping down after the incident took place.
Checking the general overview gives a viewpoint of re-accumulation after the first break upwards. In the scenario of 2016, there’s also the period of sideways movements, while the 21-Week EMA started to catch up. In the current scenario, the market is still waiting for approval of the bull
market before it’s able to trend upwards. Not only is the 21-Week EMA substantial support according to the previous bull market, but some fundamentals are also coming into play as well. In May 2020, the halving will occur, which overall creates a bullish effect on the market. In the near-term, the launch of the Bakkt Bitcoin futures platform the first with physical delivery of Bitcoin on Sept 23 could have a beneficial effect on the market as well as any positive news related to a Bitcoin ETF should have a bullish impact on the market in general.
Nevertheless, on the exciting note, altcoin/BTC pairs started to bounce insignificantly during the past dropdown of Bitcoin and the overall market cap excluding BTC is still hanging around the previous resistance. During the previous dropdowns of Bitcoin, it was reasonable to see the altcoins move down some more than Bitcoin as they were correlated. However, it looks like the tide is turning around. Going back to the previous cycle (started in January 2016), we can spot some connections here too. In 2015, there was a nice run of this market cap as well, though caused mainly by Bitcoin running upwards. After that, a sharp dropdown happened to retest the past resistance levels to become support, breaking the 21EMA and running upwards after. Like the market now is a confirmed retest of the old resistance area as support. Crucial for that is a bounce in altcoin/BTC pairs, in which the total altcoin market cap remains low during drops of Bitcoin.
The same retest and levels can be spotted on the Ether (ETH) chart, which is a vital indicator of the altcoin market. It’s hard to expect ERC-20 tokens move upwards, while Ether is still downwards trending. The chart is still in a falling wedge and holding on a critical support level. If Ether manages to keep above $155 and flip that level support, a massive breakout upwards is expected with a potential target of $370. During this point, Bitcoin should remain flat/slight trend upwards to give altcoins space and catch up. However, when ETH/USD starts to move, other
ERC-20 tokens might follow suit.
One of the most discussed topics during the past months by the whole crypto community. The supremacy must drop before we can expect severe altcoin movements, however for that to drop, some signals are generally provided. From the previous “alt seasons,” a bearish deviation was spotted on the Bitcoin dominance chart before a severe dropdown (this evidence goes back to January 2016). Currently, a potential bearish divergence can be created on the market during the next week, which could cause a trend shift towards altcoins. The last dropdown in January 2016 in Bitcoin price was caused by altcoins starting to run away, with momentum shifting from Bitcoin to altcoins. However, what scenarios can be expected from Bitcoin? In a bullish situation, the Bitcoin price must secure the support area around $10,100-10,200 and break through the significant resistance and downtrend. If the price manages to do so and flip the $10,800-11,000 as support, the highs of $14,000 are back in play. However, after such a harsh denial, it’s not expected to see such a rally again. If Bitcoin decides to push upwards through this bullish scenario, it won’t be a surprise to see altcoins start dropping down back again as the market shifts focus wholly on Bitcoin. In that case, the dominance will move up towards 75-80%.
In a bearish scenario, the price can’t break above $10,600 and can’t hold the $10,100-10,200 area as support. This will give space towards the $9,200 support area, which also finishes the descending triangle pattern. However, given the support levels beneath us (in which the 21-Week EMA is the most important one), it’s not to be expected that we’re going all the way back down towards
$6,000 if we’re bullish. As previously noted, it’s healthy to see a period of re-accumulation on a new floor. In that sense, a scenario with a small drop towards $9,000 would provide a test of the 21-Week EMA and would also take the liquidity below the support of $9,300. This is essential support, so usually, many stop/loss levels are beneath this zone. From that perspective, the
market is still looking very healthy and re-accumulating here. If the market indeed copies the 2016 performances, a test of the 21-Week EMA was enough for confirmation of the bull market and the altcoins to start moving.
Will history repeat itself?