Ethereum and Altcoins to Turn Bullish as Bitcoin Price Wavers?
Bitcoin’s price dropped and consolidated, but the altseason failed to come back. Will altcoins finally rally as BTC is on the verge of dropping to new lows?
The most recent Bitcoin price drop caused many altcoins to drop heavily, but can one say that they are doing poorly or is it only their USD pairs which are affected? Since a temporary bottom was found at the start of September, altcoins have steadily gained value in their BTC pairings. Take the following, for example: ETH/BTC is up +32%, XRP/BTC +27% and XLM/BTC has gained +29% during this time.
Crypto market data. Source: Coin360
Let’s take a closer look at altcoins to investigate what is happening.
Altcoins total market capitalization chart. Source: TradingView
The altcoins market cap has been in a prolonged downturn since the beginning of July when the market reached a $126 billion cap. This same level served as a support in 2018. A harsh rejection was followed by a bearish downtrend which knocked the market cap all the way back towards the support near $60–66 billion.
Currently, the market is resting on an important order block, which was previously found to be a support and trading range back in September through November of 2017.
Based on this view, it’s clear that the market has to break upwards to become bullish again, as otherwise the downwards trend will continue.
Referencing historical data of the altcoins market price action, one can conclude that altcoins perform best when there is a slow upward move from Bitcoin. In some scenarios, altcoins even outperform Bitcoin when it’s price is slowly ascending.
Clearly, in order for altcoins to rally, Bitcoin first has to find support. That’s the key marker that is needed for altcoins to start moving alongside BTC.
Bearish retest or accumulation?
Total altcoins market capitalization 6-hour chart. Source: TradingView
If we zoom in, the chart above shows a bearish retest of the $66 billion level. In order for this scenario to turn bullish, the altcoins market capitalization has to break above the $66 billion level and reclaim is as a support.
It’s likely that the altcoins market cap will continue in this range and $57–59 billion has to remain a support in order to have some upwards perspectives. Lose this zone and the $35–$40 billion range is the next area to look for.
However, as long as the $57–$59 billion area holds as a support and the market cap moves inside the developing falling wedge structure, we could see a few slight signs of a short term reversal.
Some signs to look for in this potential bottoming scenario are bullish divergences or accumulation movements (marked by sideways patterns in a tight range).
Confirmation of these movements should follow later this month as the pattern and trend lines are coming together in preparation for a decisive move.
Ethereum 2.0 FOMO to come?
Historical data shows that Ether is often the main indicator for altcoins movement. This is partially because of its market cap size and the fact that the majority of the smaller coins are ERC-20 tokens built on the Ethereum platform.
Alongside this key indicator, Ether is working toward the release of Ethereum 2.0 which is expected to launch in Q4 of 2019. This could be a gamechanger for altcoins and a possible trigger for the market to move upwards. Price typically runs up prior to the event, so it’s possible that traders will buy the rumor and sell the news.
A bullish breakout awaits Ether
ETH/USD daily chart. Source: TradingView
Notice that the ETH/USD chart shares some similarities with the total altcoins market capitalization chart.
Ether is also hovering inside a falling wedge structure that has been in a downtrend since peaking at $368 toward the end of June. The price bounced on an i