The fall continues…- Cryptocurrency enthusiasts are going through a complicated time and the pain may not be over. the Bitcoin attempts to stabilize around $20,000 and Ethereum is trying somehow not to fall below the psychological threshold of $1,000. It should be remembered that Ethereum was trading at almost $5,000 in November 2021.
Since then, the leader in altcoins has recorded an 80% drop. This isn’t the first time this has happened to cryptocurrencies, and it may not be the last. The hodlers many altcoins are suffering, the market is bearish, is it possible that we can have a quiet moment where the decline is just beginning? Summer is approaching, it’s a period with less volume. Last summer had allowed cryptocurrencies to rebound, but the macroeconomic situation is different, difficult to think that it will happen again. Let’s see the situation on altcoins!
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Ethereum vs. Bitcoin: loose support, bearish continuation
The graph ofEthereum versus Bitcoin allows us to gauge the two behemoths of the cryptocurrency market. Ethereum being the altcoin leaderit allows to know if the altcoins are wanted by investors.
Support number 1 did not allow a rebound. The week isn’t over yet, but it looks like S1 don’t hold. With this in mind, there is a good chance of finding the pair at the level of the bracket number 2. The ETH/BTC pair is bearish and below the bearish trendline. As during the last bearmarket, it will be necessary to overcome it for Ethereum to regain strength. strength against bitcoin.
The momentum is also bearish and below the trendline. Again, you will have to be patient and wait for the trendline to break to find buyer flow.
Capitalization breaks the range down, bearish signal for altcoins!
Until a few weeks ago, the capitalization of altcoins was in a tidy and the bottom of the range could have acted as a support. the support did not hold and the range was broken:
In early June, capitalization fall and joined the support below. This is the maximum capitalization reached by the altcoin market in 2018. It would be dangerous to go below this support.
At the moment the graph is bearish and it will take buyers defend this support. Considering the macroeconomics, the US market, it is quite possible that the capitalization of altcoins will dip lower. If the market has gone into a down cycle several months, even several years, it will be necessary to be vigilant.
An encouraging signal would be:
- A reintegration of the range on a weekly basis.
- A bullish structure on a weekly basis.
It remains quite possible to move towards the old support which has become resistanceit will then be necessary to be wary, because a range could be set up between the two terminals (red and green). The bearish scenario would see the capitalization continue to fall to a dynamic change weekly.
The dominance of Bitcoin: it gets stuck at the resistance level
The graph of the dominance of bitcoin lets know where is the capital going :
This may be the only graphic left encouraging, for the moment. Despite the strong fall known recently, the dominance of bitcoin remains stuck in a row. At the level of resistancethe dominance has sharply dropped showing signs of weakness. The graph should begin to structure a dynamic changebecause at the moment the momentum is in favor of Bitcoin.
The momentum is bullish in weekly time units. There is no sign of weakness for the moment on this indicator.
In such a complicated context, the dominance of Bitcoin cannot get out of this tidy and a low range return would be interesting for altcoins. If cryptocurrencies have entered a multi-year bear market, Bitcoin dominance will rebound and exit from the top of this range. This graph is a last hope for altcoins. In view of the situation, it is necessary to be extremely cautious as altcoins can lose 90% multiple times before they can find a low point.
Derivatives market shows players betting lower on altcoins
The derivatives market enables players to be able to expose themselves with the sink. This practice is dangerous, because it gives the illusion of being able to make bigger profits in less time. The reality is different and it is recommended tobe careful with these products.
We see it, the funding rate is very negativethe actors in shorts pay a fee to be able to stay in position. This was already the case last summer and it allowed altcoins to squeeze players who were betting on the downside. Since November 2021, many positions have been closed on altcoins, as shown in the open interestest. This returns to last summer’s levels. Is the purge sufficient? Difficult to say given the macroeconomic context. It would not be illogical if altcoins could bounce a little after the sharp decline of the last few months.
In the space of just a few weeks, hopes of a buying return on altcoins have evaporated. Bitcoin fell until it found a temporary low near $20,000 and there is no indication that the decline is over at this time. Ethereum is weak against Bitcoin and it will be necessary to be patient to see the leader of the bullish altcoins again. The last hope lies in the Bitcoin dominance chart, which remains stuck in a range. After this sharp fall on the altcoin side, is it possible that the summer will bring some rebounds? Institutions are keeping a low profile during this period and this could work in favor of altcoins. In any case, it is advisable to remain cautious, because the year 2022 is far from that hoped for by cryptocurrency enthusiasts!
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