Are Altcoins on the Rise?
Please note that this article does not represent financial advice and/or should not be considered as such.
What’s the Point?
1) From a cyclical point of view, when we look at the previous bullrun (back in 2017) the Bitcoin halving catalyzed the explosion of the altcoins in March/April of the following year.
Indeed the Bitcoin halving of 2020 could influence 2021’s market just as the halving of 2016 did (in early 2017) hence the strong possibility of having a bullrun in the near future.
2) Ether (ETH) is back on track and reached a new All-Time High a few days ago, also leading the market.
3) A new wave of individuals and institutions have entered the market, despite the correction of the last few days.
However, it’s very difficult to know where the bottom is since that’s currently a game of psychology instead of real fundamentals that is taking place, do not forget that being a trader is 80% psychology and only 20% analysis.
What is certain is that the madness is not going to stop any time soon, notably thanks to the large inflow of capital flowing into the market.
The market is becoming more and more complex but it’s important to remember to keep your stop losses activated because we are never safe from a more violent correction, the cryptocurrencies’ market being not considered as the Far West for nothing.
The Importance of Technical Analysis
Mastering technical analysis is crucial in order to understand its importance in terms of a risk management tool.
If the cryptocurrency market is compared to the Far West it is precisely because it is full of novices who have no notion of trading.
Do not forget that in this field, you are dealing with professionals who capitalize perfectly on mass psychology.
The graph has no indicators to make it more refined, especially where I want to draw your attention, since it is on this type of weekly structure that we will have to examinate the probability of having a buy signal.
In a bull market, broken upward resistances are usually retested in the correction phase to become supports for new upward impulses.
This is typically the context we are observing at the moment, even if for the moment the bottom is not definitively set in the $38–42K USD area.
But remember that this zone was resisted a few weeks ago. We visualized it when we noticed that the price hit the 58K target and landed one more time on the last resistance mentioned above — however, we are not going to make hasty conclusions about the bottom, because technical analysis does not give certainties, but probabilities.
We are going to look for the figure I have drawn in the form of a double hollow rising above the support area identified thanks to an horizontal pivot.
If this pivot is broken upwards on a weekly basis, there will be a high probability of positioning yourself at an opportune moment to surf the new bullish wave, all with a reduced risk — there are several observations to this analysis.
First of all, this chart is mainly used to schematize the buying set up because it’s not impossible to have more than two ascending hollows under a single pivot.
Moreover, this figure can be materialized on a lower support.
In Conclusion
In the event of a break, the altcoins that have been consolidating until now should follow and have their catch-up session — for serious projects, an outperformance against BTC could arise.
Keep in mind that the market is still very volatile and that uninitiated people are at high risk of being left out in the cold in the process.
N.B. Thanks to MTX33 for helping us write this article.
