You are currently viewing Market Outlook #126

Market Outlook #126

Market Outlook #126 (24th May 2021)

Hello, and welcome to the 126th instalment of my Market Outlook.

In this week’s post, I will be covering Bitcoin, Ethereum, Binance Coin, XRP, Litecoin, Monero, Zilliqa and COTI. I will also be providing some updated thoughts on Altcoin Market Cap.

There are fewer altcoins featured today as I wanted to spend longer looking at Bitcoin and Ethereum and concluding with the overall picture on alts, thus this post is a lot longer than usual. I will focus on more altcoins and reader requests following the monthly close next week.

As ever, if you have any suggestions for the next post, feel free to leave them in the comments below.

Bitcoin:

Weekly:

BTCUSDWeekly

Daily:

BTCUSDDaily

Daily (2):

BTCUSDDaily2

4H:

BTCUSD4H

Price: $36,417

Market Cap: $687.411bn

Thoughts: Well, to say that the past week was beyond expectations would be a severe understatement; if anything, I think it is fair to say that we experienced our first black swan event since the March 2020 crash. Given the manner and extent of recent events, this post will be longer than usual and I have provided multiple additional charts for BTC and ETH in order to more fully illustrate what happened and where I think we may be headed.

If we begin by looking at the weekly chart, firstly glance at the cycle top from January 2018. Here, we notice that price had a typical blow-off top into $20k then crashed 48% into $10,000 before bouncing into the 78.6% retracement at $17.6k, printing a complacency shoulder and subsequently breaking down below $10k, thus ending the bear market. Now, turn to recent events: whilst we certainly did not have a blow-off top, there is no doubt now that the range between $43k to $65k was indeed distribution, as evidenced by the breakdown from that range as opposed to breakout higher. Following the $65k top, we made a higher-low at $47k, followed by a lower-high at $59k, and have since sold off hard, breaking market structure and losing the $43k support area. Quite clearly, the $59k lower-high looks nothing like the complacency bounce in 2018: there, we sold off hard, retracing 50% in a week, followed by a sharp reversal and lower-high at $17.6k; here, we made a convincing higher-low after forming a flat top that looked primed for a breakout and then the narrative shifted and we failed to push on to new highs.

Since putting in that $59k top, however, we have now seen an equally brutal sell-off, with price retracing 54% from the $65k all-time high, albeit over several weeks, with last week closing firmly below $43k and back inside the consolidation range that preceded the leg into all-time highs. Price dumped as far as $30k on Coinbase and lower on derivatives exchanges as liquidations cascaded through support levels, in a manner not too dissimilar (albeit less dramatic) than that of March 2020. In doing so, it has traded into both range support and trendline support, with price bouncing into the weekly close and closing above the 50% retracement of the entire bull cycle at $34k. We are, undoubtedly, at a crossroads in my opinion: either the bull cycle is over and we have a lot further to dump before a bottom is found and – even in the case of a double bubble scenario – at least several months before new highs are attempted; or, we have traded into the bottom now and the fact that the retracement has been so severe is due to a combination of shifting narratives and liquidation cascades.

So, which is it? Well, there is no way to know for certain yet. I am leaning towards the bullish end, primarily because we are still above the range support that preceded the run to all-time highs and we failed to close below trendline support from the March low. Moreover, historically, cycles last a lot longer than four or five months following an all-time high break. Lastly, it may well have made sense to have such a severe retracement in the context of shifting narratives, over-leveraged market participants and the fact that – since March 2020 – BTC had not really had much of a prolonged correction; the two corrections this year preceding the all-time high were sub-30%. That said, I am not planning on playing a game of hope here. Instead, I will be making the assumption that the bull run has ended for now, as we have broken to a new low on the weekly timeframe and thus lost bullish market structure. As such, I am looking to sell a good chunk of spot on a complacency bounce. This relief may come this week or in a couple of weeks but if the cycle is over, there is always a sharp complacency bounce that draws people back in. Looking at the chart, I do not think we get the 78.6% retracement bounce like in Jan 2018, as that would see price back near $58k, at which point we’d have recovered numerous important key levels and thus look likely to spring for new highs. Instead, I am expecting a bounce anywhere between $43.5k and $51k to form a lower-high, with the 50% retracement at $47.5k aligning with the weekly swing-low that preceded capitulation into $30k. Rally into that area and I will be selling spot, making the assumption that we are forming a lower-high. I will also be looking at the Dollar Index, as per this tweet, for further confluence. From that point, I get my bull hat back on, because I don’t really believe the bull run is over but I don’t want to leave myself exposed for another leg down – if we do find resistance below $51k, then make a higher-low above $30k and then reclaim the lower-high as support, I would look to rebuy my spot, likely above $52k and thus possibly 10-15% higher than where I sold it. That is not a problem for me given that we would then have confirmation that the bull cycle is very much still in play. Alternatively, if the complacency bounce is a complacency bounce, we should see price move lower and break below $30k, thus losing trendline support and the consolidation range and beginning a larger retracement towards the previous all-time high, above which I would be looking to rebuy my sold spot, expecting a front-run of $20k.

Now, turning to the first daily chart, we can see that price sold through the 200dMA around $42k and closed below it, with it not having been tested at all this bull run, unlike in the previous cycle. We then reclaimed it for a day but subsequently price sold off again and the $42k area is now key resistance. That said, over the past few days, we have seen consolidation within the capitulation candle range, with not one but two inside days being printed, and price sweeping failing to close below $34k on successive attempts, with daily RSI printing some divergence here. Given that we are holding above the $30k low and the trendline support, I would expect to see the relief bounce into $42k this week. If and when price does trade into that area (as you can see on the 4H chart), there are a lot of clean highs that I am expecting to get swept into $43k before we see much of a reaction. If price can close the daily firmly back above the 200dMA and cluster of highs between $42-43k, I would expect a further squeeze into that $47k support turned resistance that aligns with the 50% retracement. And that is where I really expect us to find some trouble if we are printing a complacency shoulder. If we do squeeze into that area, as mentioned earlier I will be scaling out of around half of my spot holdings, looking to either buy on a reclaim of the area (thus higher) or much, much lower.

Turning to the second daily chart, I have marked out a number of possible scenarios I will be watching for, all dependent upon reactions at key levels. The green path is the most bullish path, where we might squeeze as far as $48k before finding significant resistance but then, crucially, price will make a higher-low; if we are super bullish, this higher-low will likely be above the 200dMA, having reclaimed it as support, and from there we may consolidate before reclaiming $47-48k as support and thus triggering my rebuys higher. The second-most bullish path is in white, whereby we squeeze higher, find resistance and drop off back towards the mid-$30k area and consolidate for several weeks above the trendline and above the $30k capitulation low, from which we then resume the uptrend in Q3. If the cycle is over, I would expect price to find significant resistance between $43-50k, form that complacency shoulder, break down on the lower timeframes, retest the 200dMA and $42k area from below as resistance and then capitulate below the $30k swing-low, thus losing the consolidation range and trendline support and opening up the move into $20k, where the next major support level is.

Now, looking at the 4H finally, we can clearly see that trendline resistance from two weeks ago is capping price, with lower-lows forming after every test of the resistance. If we are to see that relief bounce, breaking above this trendline will be the first indicator, with a 4H close above $38,800 being the confirmation of a market structure shift on this timeframe and thus the likelihood of higher prices. We have seen a three-drive pattern into the low-$30k region forming with each low being swept into the final low at $31k, as is common with accumulation before reversals, and there is some bullish divergence here. I would like to see a high volume breakout above the trendline early this week to open up the possibility of that $43k squeeze later this week, with higher prices likely depending on the reaction in that area. Lastly, it is important to remember that the monthly does not close for another 7 days, so next week could look quite different.


Ethereum:

ETH/USD

Weekly:

ETHUSDWeekly

Daily:

Daily (2):

ETHUSDDaily2

4H:

ETHUSD4H

ETH/BTC

Weekly:

ETHBTCWeekly

Daily:

ETHBTCDaily

Price: $2296 (0.0625 BTC)

Market Cap: $266.375bn

Thoughts: Let’s begin with ETH/USD: if we first take a look at the weekly chart, we can see that the rally into $4385 marked the local top, with the bearish reversal candle followed by last week’s capitulation. That being said, despite the manner of the sell-off – with price falling 60% from the all-time high in two weeks into $1728 – price closed the week above prior resistance now turned support at $2050, the breakout above which led to the rally into $4400. Volume on the week was the highest since March 2020 capitulation, which marked the bottom at that time following a near-200% rally into $290 in the space of a few weeks. The pair is still above trendline support from that March 2020 low and weekly RSI looks to be printing hidden bullish divergence, having printed a lower-low as price appear to be printing a higher low above the previous all-time high. This remains unconfirmed at present, but it is promising. Moreover, if we look back to 2017, mid-cycle also saw a severe correction of just shy of 70% before price rallied to new all-time highs in Q4; looking at current trendline support, if it remains intact, we would expect $4400 to be taken out before the end of the year. Now, just like BTC, it is possible that the crypto cycle is now complete and we have entered a bear market, but price trading into the consolidation that retested the prior all-time high is not the signal for that. What bears want to see here is a complacency shoulder form over the next couple of weeks, followed by another leg lower, likely breaking trendline support and pushing the pair back below the 2018 all-time high at $1416. If we do see a close back inside that high, then it is likely we will not see new all-time highs for quite some time, with a much deeper retracement towards the 200wMA likely. Until then, this is still an uptrend, albeit a more ugly one after last week. Again, the month closes in a week and things may look much worse or much better by then…

Turning to the first daily chart, we can see that trendline support that has held throughout 2021 was broken on the weekend move below $1900, with price dumping into $1728 and then closing back above the $2050 resistance turned support, thus printing a swing-failure of the capitulation wick from mid-week. Further, this occurred on lower volume than the capitulation wick, indicating seller exhaustion into the $1700 area. Daily RSI is now the lowest it has been since March 2020 and I would expect ETH to lead to relief bounce, with a move into $3000, where the 50% retracement lies, likely. If you turn to the second daily chart, again I have marked a couple of trajectories, with the less bullish path seeing price squeeze towards the 38.2% retracement (or potentially even higher) before breaking down for a third leg lower into the 200dMA, where I would look to open longs around $1550. If the bottom is in, price should form a higher-low above $1700 and possibly even back above the trendline after finding some resistance between $2750 and $3300. If, however, that relief rally forms a complacency shoulder somewhere in that range, I would need to see a close below the 200dMA and back inside the 2018 all-time high to confirm that the bull market is over. I would be very surprised, to be honest, given the fundamental narrative driving ETH is happening in mid-July.

Turning to ETH/BTC, as expected, we printed a local top below 0.085 and price reversed towards the 0.0645 area I marked out last week. What I did not expect is the speed of the retracement nor the capitulation deep below the level into the channel resistance now turned support. That said, this does not look like a bearish chart in the slightest and I would expect to see this area now hold and for price to consolidate above last week’s low, although a sweep into 0.0536 would be fine. If we start closing back below 0.053, I would expect a deeper retracement to follow towards the 2020 highs around 0.042, but that would begin looking more bearish given the channel breakout; nonetheless, we would still be above the 200wMA and the multi-year range, so there is quite some way to dump before the pair looks even remotely bearish longer-term. If we drop into the daily, price printed a reversal hammer into 0.055 and I would expect to see a bounce towards 0.07 from here, followed by a period of consolidation above last week’s low before continuation above 0.086. If we form a lower-high and break below 0.055, we may well be headed for that deeper retracement, like that of Q1 this year, where price pulled back into the 360dMA before bottoming, but formed a higher-low after the February higher-high.


Binance Coin:

BNB/USD

Weekly:

BNBUSDWeekly

Daily:

BNBUSDDaily

BNB/BTC

Weekly:

BNBBTCWeekly

Daily:

BNBBTCDaily

Price: $293 (0.008 BTC)

Market Cap: $45.127bn

Thoughts: Beginning with the weekly chart for BNB/USD, we can see that price put in an all-time high at $707 and sold off hard last week from up there, retracing 70% from the high into $210. In doing so, price closed back below the previous high at $371 but no market structure has, as of yet, been broken. Such has been the nature of BNB’s run that there are no real weekly swing levels to look to, but the next area of support below would be prior channel resistance and trendline support around $100, should last week’s low be closed below. That said, for now, it is likely we see some relief, and I’d be looking at $371 to provide some resistance as the only key level below the all-time high on this timeframe. If we drop into the daily, there is some clearer structure here, with price having trading back inside the range that preceded the run to $707, with yesterday’s low sweeping the capitulation low at $254 into the 200dMA at $210 before closing back inside $254. From here, I’d expect price to move towards that $371 area and potentially squeeze above it towards the support turned resistance around $420, with the 50% retracement above that at $457. BNB is likely to follow the rest of the market and thus the scenario is not too dissimilar from ETH; should we see a complacency shoulder form above $370, a close below $210 would confirm the bull market is over and I’d expect a lot more blood, with $100 the next major support below.

Turning to BNB/BTC, much like ETH/BTC, this still looks bullish to me, particularly on the weekly chart where price made an all-time high at 0.0124 and has just sold off with the rest of the market back into prior resistance now turned support at 0.0065. If the pair can hold above here and form a new base, I can see BNB extending beyond that 0.0124 high in Q3. If, however, we form a lower-high and then close back inside 0.0065, thus turning market structure bearish, I’d expect a drop towards 0.0048 to follow; lose that and there is no real support all the way back into the 2020 high at 0.0032. Looking at the daily, price broke below the 0.00805 support yesterday as it capitulated into prior range resistance at 0.0065, but today we look to be reclaiming that level. A daily close above it would be the key indicator in a prolonged bounced towards the next resistance at 0.0105, which I would expect to provide significant resistance. Any daily close above that level would of course be the sign that we are just v-reversing to new all-time highs for the pair, but I expect structure to form instead, with a lower-high somewhere below 0.0105 followed by a higher low above 0.0065 before new highs. As I said, BTC pairs seem to look bullish until proven otherwise at present if we are looking purely at the chart.


XRP:

XRP/USD

Weekly:

XRPUSDWeekly

Daily:

XRPUSDDaily

XRP/BTC

Weekly:

XRPBTCWeekly

Daily:

XRPBTCDaily

Price: $0.86 (2345 satoshis)

Market Cap: $39.683bn

Thoughts: If we begin by looking at XRP/USD, we can see from the weekly chart that price printed a lower-high at $1.67, failing to close above it to move to new yearly highs, and sold off with the rest of the market last week, with the pair closing below support at $0.91, thus turning market structure bearish. This is classic complacency top price-action and yet price sold-off into an area of historical resistance turned support at $0.78 and held above it, so I would not want to be looking for shorts just yet. Looking at this, it is feasible that if the rest of the crypto market has put in a bottom, this shift in market structure will be short-lived and XRP too has put in a bottom, with a weekly close back above $0.97 looking promising if it comes. That said, the structure itself is now bearish (lower-high followed by a lower-low), so I would be very cautious about playing this either way at the moment. What we may well see is a relief bounce higher back above $1 leading to a third lower-high, at which point I would be very concerned if I was an XRP holder and would be looking for price to return to $0.57 at the very least. If, however, XRP follows my expectation for the rest of the market, puts in a lower-high after reclaiming $0.97 and then holds above that area as a higher-low, then we are ready to look for longs for new yearly highs later this year. Dropping into the daily, again we can see price has traded right into the 200dMA, from which it has bounced, so I simply don’t see any high R setups on either side of the market for the pair just yet. If the bearish structure holds and XRP is just weaker than the rest of the market, we could expect to see $0.97 actually cap the bounce and for price to move lower from there, with the $0.57 area the next major support lower. As I say, this pair is particularly unclear at the moment given its proximity to higher timeframe support but its shift in weekly market structure.

Turning to XRP/BTC, as anticipated price rallied into the 4k-satoshi area where it found significant resistance, capped also by the 360wMA. Price then sold off with the rest of the market and we now have a weekly bearish engulfing that has formed, albeit with price sandwiched between support and resistance as opposed to simply sat at resistance after a parabolic run. This compounds the lack of clarity in XRP at the moment and I would not rush into any decisions and certainly no new positions. If we look at the daily, price has returned to the 360dMA and original breakout area above 1900 satoshis after the run into 4k, and the swing-failure of the 2246-satoshi low made sure that bullish market structure was maintained. If the pair can consolidate here above 1900 satoshis, I think the bottom may well be in despite the weekly close, but I wouldn’t look to trade this until it reclaims 3072 satoshis, which will now be resistance; flip that and I will long this for a breakout above 4k. Until then, no position.


Litecoin:

LTC/USD

Weekly:

LTCUSDWeekly

Daily:

LTC/BTC

Weekly:

LTCBTCWeekly

Daily:

LTCBTCDaily

Price: $160.83 (0.00437 BTC)

Market Cap: $10.735bn)

Thoughts: Safe to say both my leveraged long position and my spot buys at $270 did me no good this past week, with price stopping me out on the former (thankfully) and my manual exit at ~$230 saving my spot buys from being over 50% underwater at the trough.

Looking firstly at LTC/USD, from the weekly we can see that price has closed below the parabolic curve of the rally, indicating that a period of consolidation is needed before another attempt at cracking the $420 all-time high is attempted. Price also dumped through the past few weeks of steady climb in the space of a few days, retracing nearly 73% from the yearly high into $118 last week on Coinbase (and lower on some derivatives). Further, just like XRP/USD, weekly market structure was lost, as price closed below the $220 swing-low. That said, whether the cycle is over for LTC or not, I would expect to see a bounce towards the 38.2% retracement area at $230, where we may see a complacency shoulder form. If we look at the daily, price held above the 360dMA having lost the 200dMA and I would like to see a daily close above $183 to open up a further relief bounce into that $230 area, where I expect a lot of resistance to be found; flip that and we may squeeze as far as the 50% retracement at $264, but until we put in a higher-low following a bounce there is no way to tell whether the bottom is in or not, so whilst I will be looking for intraweek longs into $230 from here, I will not be holding beyond that. Looking ahead, if price does return to last week’s lows, the next support below is $98.50, followed by $85, but in that case the bull cycle would very much be over and those would be targets for short positions as opposed to areas to open up longs.

Turning to LTC/BTC, much like other large-cap BTC pairs, price has returned to an area of support after several weeks of rallying, and it is important that 0.00375 now hold as support, or else the pair is likely to fall towards the April low at 0.0032 and potentially lower. Market structure is still bullish following the weekly close above 0.0055, and it is likely that any higher-low that forms here would be a great opportunity for an entry before another leg higher into the 200wMA and 360wMA confluence above 0.0082. Again, looking at the daily, this is not a place to look for shorts or sell spot in my opinion, as we have retraced back into the 200dMA and 360dMA and are sitting above support, but if price bounces into 0.0055 and fails to break back above it, that would be a good spot to hedge your spot or looks for shorts, in my opinion.


Monero:

XMR/USD

Weekly:

XMRUSDWeekly

Daily:

XMRUSDDaily

XMR/BTC

Weekly:

XMRBTCWeekly

Daily:

XMRBTCDaily

Price: $242.42 (0.00645 BTC)

Market Cap: $4.34bn

Thoughts: Firstly, looking at XMR/USD, the picture is not too dissimilar from Litecoin, with price having broken below the parabolic curve but, crucially, Monero has not broken weekly market structure. The pair printed an all-time high at $518 and then sold off 68% into prior resistance turned support at $215, sweeping a cluster of lows in that area but closing above the weekly swing-low and thus preserving bullish market structure. From here, I would expect some consolidation to occur after a relief bounce, with $287 a key area of overhead resistance now. If we turn to the daily, $287 was the range resistance that preceded the run to all-time highs and it is now acting as resistance, with the 38.2% retracement just above it at $305; if XMR/USD can clear that area on a bounce ,we can expect a squeeze potentially as high as the 61.8% retracement at $387, where there are a cluster of prior supports that would likely act as resistance. Much like other large-caps, the pair sold off below its 200dMA and into the 360dMA, though Monero has now reclaimed the former. For bears, any lower-high from here should lead to a breakdown below $170, which would signal the bear market and a return to at least the 2019 high at $123, if not lower.

Turning to XMR/BTC, again we find no real reason to be bearish on a higher timeframe, with the pair having found resistance at the long-term trendline and 61.8% retracement confluence ~0.0087, with price selling off below reclaimed support at 0.00616 but being bought back up hard, with the weekly closing above that pivot area. If we lose this area, I think its safe to say the pair would begin to look bearish again ,with a retest of range support at 0.00383 likely, but above 0.006 I think the pair looks strong, with another test of trendline resistance probable over the coming weeks. Turning to the daily, price is holding above the 200dMA but the 360dMA is now acting as resistance, with the breakdown level at 0.007 also capping price; flip that and I think the bottom is in for the pair.


Zilliqa:

ZIL/USD

Weekly:

ZILUSDWeekly

Daily:

ZILUSDDaily

ZIL/BTC

Weekly:

ZILBTCWeekly

Daily:

ZILBTCDaily

Price: $0.10 (268 satoshis)

Market Cap: $1.142bn

Thoughts: Beginning with the weekly chart for ZIL/USD, we can see that price struggled to push into price discovery after closing at a new all-time high above $0.235, with last week leading to a 74% retracement from the all-time high into $0.068. The pair closed the weekly below the prior swing-low at $0.115, thus turning market structure bearish, but traded into the long-term trendline support from March 2020. This is somewhat akin to XRP/USD, where we have price now sandwiched between support and resistance, but as with other positions I am going to be playing this as though the cycle has ended, with half of my remaining position being sold if we get a complacency bounce into $0.13 or higher, with this being rebought if we then form a higher-low and break higher or if we reclaim $0.175, as that would confirm to me that the bottom is in and that the weekly structure shift was a trap. Turning to the daily, we can see that price has traded into a historical range, with $0.105 as immediate resistance and $0.115 as the support that was lost as price capitulated; if ZIL can climb back above these, I think there is a good chance we squeeze towards the 38.2% retracement at least, if not the 50%, where we may see a lower-high form. The bullish scenario from there would be for price to return to the 200dMA and consolidate above trendline support before making a run at new highs in Q3. Naturally, the bearish scenario would be for $0.068 to be lost from there, leading to a deeper retracement, perhaps as far the August 2020 high at $0.03.

Turning to ZIL/BTC, this remains one of the primary reasons why I do not believe Zilliqa is done with its cycle; the weekly chart shows that the BTC pair has barely even moved since the all-time low formed in 2020, having trudged higher steadily over the subsequent year but remaining around the historical pivot at 340 satoshis for much of the past few months. The pair has not even retested the 23.6% retracement of the bear market at 630 satoshis, which is the bare minimum one might expect in a bull cycle. Nonetheless, I obviously would not be looking to hold this if we do return towards that late 2019 and early 2020 range below 100 satoshis, so any weekly close below 225 would be a key exit signal, with 100 satoshis as the key support below, where I would look to rebuy spot. That said, if we look at the daily, despite all the chop the pair has simply returned to the 200dMA and 360dMA, which have supported the trend for a year, with price failing to close below 225 satoshis. As long as we are above that cluster of supports, I think the pair will simply consolidate and move higher again as it has done after every sell-off. The next target above would be 500 satoshis, but I do not expect that to occur anytime soon. For those on the sidelines, this may well be a high R entry, as invalidation is very tight on a daily close firmly below the 360dMA.


COTI:

COTI/USD

Weekly:

COTIUSDWeekly

Daily:

COTIUSDDaily

COTI/BTC

Weekly:

COTIBTCWeekly

Daily:

COTIBTCDaily

Price: $0.20 (536 satoshis)

Market Cap: $400.697mn

Thoughts: If we begin by looking at COTI/USD, we can see a similar pattern having played out this entire bull cycle, with a parabolic rally leading to a local top, followed by a 75% retracement and then a new parabolic rally to a higher-high. We have had three of these rallies so far, with the most recent leading to the all-time high at $0.58. The sell-off from that high was 78%, with last week’s low forming at the prior all-time high turned support at $0.13. That said, price did break weekly market structure following the close below $0.22 and again I am going to play this cautiously, though I did sell some of my COTI as we returned to the $0.49 resistance. Of what remains, I will be looking to sell half on any bounce into the 50% retracement area at $0.30, rebuying this higher if we return to bullish market structure or rebuying much lower. Looking at the daily, we can see that price trading into the 360dMA marked the bottom last time and it may be the case that the bottom is now in, with a fourth cycle higher to follow, but I would rather be cautious than not at this stage and I am happy to rebuy a little higher. The key indicator for a prolonged relief rally would be a daily close back above $0.22, which would open up that squeeze into $0.30. Lose the 360dMA and it is safe to say the macro cycle is over for COTI.

Turning to COTI/BTC, the pair has struggled with the 2020 resistance at 835, chopping around it on numerous attempts to break above, with the preceding week before last finally closing above, only to have the market capitulate, sending the pair back to what is now range support at 410 satoshis. What we are seeing here is clearly a large range between 410 and 835 satoshis, and any break below 410 would signal to me that this wants to move back into the 180-satoshi area. Hold above range support and I think it is likely we simply return to range resistance at 835. Looking at the daily, we are sat right at the confluence of the 360dMA and 200dMA, lending further confidence to the probability of a return to 835 satoshis should we hold this low.


Altcoin Market Cap:

ALT/USD

Weekly:

ALTUSDWeekly

Daily:

ALTUSDDaily

ALT/BTC

Weekly:

ALTBTCWeekly

Daily:

ALTBTCDaily

Market Cap: $835.465bn (22,569,837 BTC)

Thoughts: So, beginning with the weekly chart for ALT/USD, we can see that the altcoin market had been rallying for several weeks after breaking out above the prior all-time high at $570bn, with the market hitting $1.55trn a couple of weeks ago. Since, we have seen the first major sell-off since March 2020, with the market now sitting around 25-30% above that prior all-time high. Trendline support from March 2020 is still intact but the steeper trendline from this year is now broken, indicating that some consolidation is needed before continuation, if the trend is to continue that is. Further, the parabolic curve is still intact, with the market having seriously decoupled from it at the beginning of the year. If both the trendline and parabolic curve hold for 2021, we can expect the altcoin market to continue to new highs in Q3-Q4. Looking at this, it does look more like the June 2017 price-action than January 2018 given how relatively little the market has moved since the all-time high break, and in that case the blow-off top is yet to come. However, if we see last week’s low lost and the market move back below the previous all-time high, which will no doubt coincide with ETH losing $1400, I would consider the market to be bearish from that point, with weak price discovery appearing to be a deviation in that scenario and with altcoins likely to return towards the 200wMA from that point. That is the bearish scenario. The bullish scenario is that we are indeed following the 2017 altcoin fractal and that this sell-off into support will hold, with the market now consolidation and grinding higher before new highs later this year.

Turning to the daily chart, we can see that the altcoin market has lost the more recent, steeper trendline and that the sell-off from the high was 57.5%, with the market forming a low just shy of the 200dMA. If we see support turned resistance at $834bn reclaimed, that would open up the possibility of larger bounces across alts, with the next resistance for the market at $1.13trn. If we are to turn bear, that is where I’d expect a lower high to form, with a move below the 200dMA and then $570bn then confirming the bear market. If we can form a higher-low, its onwards and upwards for the rest of the year.

Now, looking at ALT/BTC, from the weekly we can see that altcoins had over-extended in their outperformance into the 2017 cycle high at 27.6mn BTC, where the market rejected and altcoins lost some ground, with the market trading into support at ~20mn BTC, around the 38.2% retracement of the entire leg higher from the cycle low. Looking at this, I don’t see why altcoins won’t continue to outperform in the coming months, but we may well need some further consolidation and potentially even another move lower into ~15mn BTC where the 200wMA lies before we see that next leg higher to the inevitable (in my opinion) all-time high. Each cycle has made a new all-time high for altcoin dominance and I do not see why this cycle will be different, particularly in the context of ETH’s EIP-1559 event in mid-July.

And that concludes this week’s Market Outlook. I apologise that it has run on for nearly 6,000 words despite covering fewer coins, but the outlook on BTC and ETH is my guide for the rest of the market at the moment and I would hope some clarity has been provided followed the past week’s price-action.

I hope you’ve found value in the read and thank you for supporting my work!

As ever, feel free to leave any comments or questions below, or email me directly at nik@altcointradershandbook.com.


[mc4wp_form id=”95″]

This Post Has 9 Comments

  1. Anthony Griswold

    I’ve read your book – amazing. I paid to read your blog content… I am just getting started and find your work interesting.

    If you offered a $100 monthly fee that offered me all the insight into your plays, I would join.

    I want to figure this out and will keep pursuing but am fucking overwhelmed !!

    Great work !!

    1. Nik

      Hey Anthony,

      Glad you enjoyed the book. I don’t offer anything beyond the material I publish here at the moment, sorry!

  2. Scott Hipkin

    Can you do a outlook on $rune please mate thank you

  3. Csaba Illés

    Hey Nik, just curious, what is your portfolio’s fiat/bitcoin/alts ratio at the moment?

    1. Nik

      Regarding my speculative portfolio, about 15% stablecoins, 25% btc, 20% eth and 40% alts. That excludes cold storage BTC. Will be looking to hedge/reduce speculative exposure to something resembling 50% stablecoins if we do get the squeeze towards $46-48k.

      1. Csaba Illés

        Thanks for the info, Nik, really useful, since no one really talks about these high level things in detail. I think it would also be great to see this info shared periodically in the future as the market shifts, to have a reference.
        On another note, would be great to see what you think about $SC and $KMD at this point, and also coins like $SXP which seem to have been rising slowly and steadily before the big drop.

  4. Guy Brooks

    Thanks for your perspective appreciate your time.

Leave a Reply