Top Level Summary
Having let the charts communicate the story, the most clear-cut read I am getting is that BTC/USDT looks ripe for further losses in the coming week. This has become my baseline after an aggressive bearish candle compromising its structure. This results in having to reconcile where this leaves us in the Alts space as Bitcoin dominance is depressed in the 40% mark with a compelling case to soon see a reversal. Interestingly, should this inflection to a higher Bitcoin dominance eventuate, will this also come at the expense of a lower ETH? Charts like the total market cap including or excluding BTC are still painting a rosy picture. When I look at ETH/Alts, it also reveals an interesting narrative of further outperformance by Ethereum. Could this be an environment of ETH dominance as it takes a larger share of the pie?
In the video below, I distil the technical outlook in the various crypto instruments that make up my macro thesis. These views tend to remain relevant and actionable for the upcoming week and is an essential part to calibrate my risks appropriately.
What type of story the market is telling us?
If you are interested in a summary of the video above, then keep reading…
BTC/USDT – Bearish structure validated
- The sequence of lower highs and lower lows has finally been confirmed.
- The close below the previous higher low heralds more pain ahead.
- The weekly bearish candle carries the highest volume since Feb 22.
- Bull candles off the weekly have failed to meet the volume average since early Feb.
- A conservative target to aim for is ~ 42k, with 38-40k moderate or even 35k (100% proj target)
BTC Dominance – Potential inflection point reached
- The first premise is that BTC.D tends to find the most meaningful turning points at or nearby round numbers (see circles outlined).
- We’ve seen a dramatic reduction from 60% to 40% in just 2 months (totally unsustainable).
- We just touched the 40% mark with the level coinciding with a 100% measured move (symmetrical projection).
- Since the break of 50%, the following 3 candles have exhibited increasing volatility.
- Top or bottom tend to be found when volatility spikes significantly. The last weekly candle starts to fit this logic.
- If history is any indication, after 50% gives in, run in Alts at or below 40% hardly lasts 1 month.
- We could still drop to 35%, which would still be just 5% below this predicted bottom.
- The chances of a bounce back to 50% before a break and hold below 35% are substantially higher in my opinion.
ETH/USDT – Bullish but overextended?
- Relentless bull run streak into new all-time highs after 6 weekly bull candles ends.
- There is room for further setbacks towards the reliable 13ema (confluent with SR flip).
- Overall, one must remain very constructive in Ethereum even if pricing advertised out of whack.
ETH/BTC – Confluent resistance hit, caution warranted
- Horizontal resistance dating back to May 2018 has been finally met.
- High in current bull run has also landed at the 200% symmetrical target.
- If history is any indication, 7 weeks of consecutive gains has been unsustainable.
- The price has reached extreme valuations near-term as depicted by a distance of 70% from the 13ema.
Market Cap – Up the stairs steadily
- While BTC keeps struggling, the market cap remains in healthy conditions.
- Each and every support (structural or local) being respected.
- No reason to think we won’t continue higher exploring new highs.
- Lots of absorption on the latest weekly dip bodes well for the overall market cap.
- This run is obviously fueled by ETH and the Alts complex.
ETH/Alts – Big statement of intent by bulls
- Ethereum ends as the real winner against the Alts complex after recently taking out a huge resistance with a backside retest now.
- The breakout occurred in higher than normal volume, which adds credence to the bullish rally we are seeing.
- A period of further ETH outpeformance against the broader Alts space is my base case based on this price action.