25/09/2018/11:40CET
When #BTC trips, #ALTS tumble! Let's take a closer look at what is happening in the #altcoin space
My regular blog posts on cryptomarkets usually concentrate on BTC. Here I want to write about some of the large alts in the market and how their charts read.
EOS
#Eos is a large cap standing at No.5 in market cap rankings.
It differentiated itself during the ICO mania of 2017 by holding a ICO fundraiser that lasted a whole year! A few months ago EOS mainnet went live and since then it has not performed well. But in its defence, not many if any coins did well in this time.
Let's take a look at the chart...
This is the daily chart vs USD.
At press time EOS trades at 5.14 usd, and has had a 17% pullback from it most recent rally that saw it reach a high of 6.31usd. This has brought us below the 21 dema again which is not a positive sign.
Eos has only started to form higher lows since about mid August. Since then it has had 2 failed rallies. From this we can see a wedge formation develop that can give us some guidance as to what to expect.
As with #bitcoin, this wedge seems to expire around mid to end of october. Is this portending something?
ETH
#Ether is struggling to hang onto its euphoria of the last week or so when it came out of the dark and staged a noticeable rally. The general downtrend of the market is still with us though and this is evident in the Ether price.
At press time ether is trading at 211 usd after rallying to a recent high of 255usd. That is a 17% drop in the last 4 days.
But it is still 26% above its lows of 167 usd just over 2 weeks ago.
Volume is starting to trail off as the bulls lose control of the market and we drift down and potentially re enter our descending wedge. This was a BAD wedge being formed. Lower highs and lower lows.
Ether had enjoyed its moment in the sun: a 4 days stretch above its 21 dema indicator.
The last time it spent any time above this indicator was way back at the end of July, and even then it was just fleeting appearances here and there.
The way I have drawn this descending wedge, it ends in the first week of Nov. A little later than BTC and EOS, but still coincidental.
LTC
#Litecoin seems to be mirroring Ether in its price action.
At press time we trade at 55.27 usd after a small bounce up to 63.80. That is a retracement of 13% in the last 3 days.
#LTC has spent a little more time above its 21 dema though. This just indicates more volatility though.
Volumes are elevated and holding which is a good sign in general, and the 50dsma seems to be tracing our upper wedge boundary. Interesting. Also the 21 dema is almost coinciding with these 2 indicators as well.
Lastly, even though out of image, our wedge ends in week 3 of October as well. Hmmm - is this a pattern?
XRP
I want to keep this post brief so I will stop at 4 coins this time. The last is the darling of the last week - #Ripple, or more accurately we should call it #XRP since Ripple does not refer to the token, but the technology in general. For those that do not really understand what I just wrote, I urge you to look up what XRP is before investing in it. It stands outside what cryptocurrencies generally represent.
With that in mind let's look at the chart.
Well as many of us know XRP had a explosive move that is reminiscent of the old altcoin bull market of Jan 2018.
At press time XPR trades for 0.44 usd after hitting 0.79 usd 4 days ago.
That high represented a 204% gain in the space of 7 days, from when it was hovering at its lows of 0.26 usd
Only the lucky are those that buy and sell at the extreme ends of a rally like that.
Those that are unlucky are those that tried to jump onto that high speed train near the apex of this move.
The drop from 79 to 44 cents is a 43% loss!
I fully expect XRP to settle back down again at the 26-32 cent range until there is a more general change in sentiment in the overall crypto space.
I want to be fully disclosed when I talk of XRP and Ripple. I do not like it. I have traded it and I have won and lost with it, but I do not have it as part of my long term holdings.
The reason for this is 2 fold:
- I do not believe in the tech! I do not think Ripple and XRP will take cryptocurrencies in the right direction and it should not be allowed to have too much oxygen to grow. In saying that, XPR and Ripple are the darling of the big banking world and as such, plenty enough oxygen with go their way without me. Ripple is competing directly with SWIFT, so it is an easy fight, and I think SWIFT will tap out without much resistance when the tide turns. I would like to see a completely open blockchain take on Ripple at its game. This would be a fair fight.
- XRP is not necessary for Ripple tech to work. Yes it is a conduit for funds to move around but if you look at Ripple's offerings, seems to me that even if XRP is used as an intermediary token for interbank fund transfers, there will be plenty of liquidity, but the token will be sold again at the other end so it will be a zero sum game and as such, it will not enjoy organic growth in value as many other cryptos likely will. I.e. not a good investment, but a interesting swing trade coin
Conclusion
I see plenty of well formed wedges in the crypto markets when looking at USD comparatives.
What is striking is that most, if not all of them seem to expiring at the same time!.
The time frame of mid Oct to start of Nov. What does this mean?
As a chart guy, I think it means that the odds are more likely than not that we will have a rise in volatility in the crypto complex as we run into this time frame, and the markets will choose a direction.
Currently it is too difficult to say what that direction is and I will not fight my bias to hope that the bulls take control.
We have seen in most tokens a retracement of over 80% This is massive. So the bias leans toward a reversal of this trend.
Seems that the bears have had the stage for waaaay tooooo long and they are showing real signs of fatigue.
Bulls on the other hand have almost broken down the gates at times, trying to regain control of the markets.
And with tightening wedges everywhere! This may be the TA way of saying:
"watch out, something is about to happen"
Alt will continue to take their cue from BTC, so we continue to watch BTC for signs of sentiment change.
As I laid out in my earlier post today, BTC is heading into the end of this wedge. This will be the moment to watch and be ready.
Lastly, anyone who traded 2017 in crypto should look back and remember how the rally played out for clues as to how to do better this time.
First BTC ran. At first slowly but then gained speed. More and more and more till we were all watching hourly charts with slack jaws.
The first signs that BTC was running out of steam was when the alts started to run.
Then the batton was passed and alts went nuts and btc dropped.
Where BTC had 10x gain, alts had 40-50x gains and more.
I expect only minor differences this time.
I think we will have the same kind of rhythm, BTC first then alts later, but with Alts, I think less of them will run like mad, even though many more will appear to fleece the newbies yet again.
Do your homework now. Investigate coins and their tech and teams. Develop a short list you like. Be VERY critical of the coins.
And lastly, split your capital into long term and speculative. 60/40 for e.g.
Gamble with the 40 and allocate the 60 methodically each time your favourite coins have a dip, like now!
As always guys, leave comments, have fun and trade safe.