• Bitcoin (BTC, Tech/Adoption Grade “A-”) holds support once again, perhaps suggesting that holders no longer have an appetite for selling.
• Ethereum (ETH, Tech/Adoption Grade “A”) attempted to lead ahead of Bitcoin but failed. Where does it stand now?
• Chainlink (LINK) has failed to break above $20 but has established firm support at $16.80.
We’re starting to sound like a broken record, once again reiterating that Bitcoin is temporarily stuck in a trading range. But being a broken record, in this case, has the potential for bullish results. Our model indicates that the longer this consolidation period lasts, the larger the eventual breakout will be.
Bitcoin has established very strong support at $32,000; it just needs to gather some bullish momentum to make a push for $36,000.
Now that BTC has once again held strong at $32,000, Bitcoin holders are no longer interested in taking profits or selling at these levels. Data from Glassnode shows recent BTC buyers are no longer selling and have begun to hold on for dear life (HODL):
All signs are pointing towards an end to the freefall in BTC prices as there are no longer enough sellers, with the remaining selling pressure coming from traders. But with renewed interest from institutions, favorable Bitcoin politicians and HODLers exhausted from the selling, Bitcoin seems poised to start a recovery.
What the catalyst of this recovery might be is anybody’s guess, but we will see the signs on the charts. The first thing we need to see is a strong push back to above $34,000 and an end to the range trading between $32,000 and $34,000.
After that, Bitcoin needs to close above $36,000 with conviction — meaning multiple days of trading above $36,000 without a fall to $34,000 or lower.
Once Bitcoin has regained the $36,000 level, the final breakout above $42,000 could happen very quickly, as we’re used to seeing during strong bull market pushes. It could happen in as little as one day, so be ready when BTC finally crosses back above $36,000.
Here’s BTC in U.S. dollar terms via Coinbase Global, Inc. (Nasdaq: COIN):
Ethereum was so close to a breakout above the midpoint of this trading range, but it couldn’t quite clear resistance. Since July 7, when it failed to clear $2,400, the No. 2 crypto by market cap has slowly slipped to a low of under $1,900 earlier today before managing to climb back above $2,000.
It’s important that ETH stay above $2,000 and get back above $2,200 in the near future. Much like Bitcoin, we won’t even start to speculate on when Ethereum will break out of this range until it clears the midpoint, which is $2,400. After that point, ETH could break out very quickly.
After the failed recovery last week, it seems as though even Ethereum, the biggest altcoin, needs Bitcoin to lead the way out of this price correction. So again, all eyes are on Bitcoin.
Here’s ETH in U.S. dollar terms via Coinbase:
To prove our point that Bitcoin must lead the way for altcoins to begin their recovery, we’ll take a look at Chainlink, one of the best performing altcoins of the first half of this current bull market.
LINK has fallen from $50 all the way to the current support level of $16.80. It has struggled mightily to retake $20, a level that it has traded above since January of this year. Chainlink looks extremely weak right now, and things will only get worse if it breaks below $16.80.
Altcoins like LINK need either BTC or ETH to lead the way out of this price correction because good fundamentals alone aren’t enough. The market mentality must switch back to bullish before altcoins can run.
Here’s LINK in U.S. dollar terms via Coinbase:
Notable News, Notes and Tweets
• Sentiment online is very polarized, with bullish content like this tweet and bearish content like this one here. That is typical of an undecided market.
• One common theme amongst both commodities and gold traders, like Peter Schiff, and crypto traders is the worry of inflation.
• As exchanges roll out credit cards and savings plans, this analyst makes an interesting case for exchanges to dethrone traditional banking over time.
What’s Next
We’ve repeated the sentiment that sideways trading is boring and can last surprisingly long, especially when crypto traders are used to high volatility. This range-bound trading period is no different.
But it still doesn’t alter our macro perspective: Bitcoin and other cryptocurrencies are still growing at a blistering pace and are still severely undervalued.
Eventually, both Bitcoin and Ethereum will break out of their current ranges, and altcoins will follow suit. This will likely lead to the next parabolic phase of the crypto market cycle.
The fundamentals are as strong as ever and constantly improving. Huge new improvements are coming up very soon for Ethereum and other leading altcoins.
Sentiment among politicians is improving faster than most analysts speculated.
Things will turn around eventually, and those that are patient enough to put up with this sideways trading will reap the benefits.
Best,
Alex
