Bitcoin Gains Strength, Altcoins Fall Asleep – Is Volatility Returning?

In this brand new crypto weekend update, we are going to take a look at the situation the market finds itself in, the changes that have taken place since last week, and what could happen for the next few weeks of October. What is certain is that we must monitor the balance of power between Ethereum and Bitcoin. A few days ago US jobs data was released with unemployment falling to 3.5%. Faced with inflation, the sector is not retreating enough, which is a bad thing for the markets since the margin of maneuver given to the FED is greater vis-à-vis the increase in interest rates. During the month of November, the market probably expects a rate hike of 75 bps, which could preserve the downward momentum that we are currently experiencing.

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An amorphous market that still cannot be decided

Price of the total market capitalization of cryptocurrencies on a 1D scale (Bitcoin, Ethereum and altcoins).

Since last week, the situation has not changed on the cryptocurrency market. Capitalization is still moving under resistance at $943 billion, especially as capitalization got rejected on the EMA32. The trio of EMA makes it possible to identify a trend reversal fairly quickly. However, speed brings more false signals that can trap you if you want to take a position.

For the moment, the objectives are always the same: monitor range exit. In addition to the oscillation of the course between the resistance represented in red and the zone at 845 billion dollars, a second support can be identified. This is located at 876/880 billion, it is shown in green on the graph. Since September 25, here is the range in which the market is evolving. During the month of October, an exit will probably take place, which will bring volatility back to the market. For now, operators are surely waiting for inflation data for September in the US. Depending on the economic situation, markets are likely to overreact up or down.

If the local support is lost, it is certain that the market will return to $845 billion. For a bullish recovery, other than breaking through the EMAs and resuming the resistance, the market will have to retake the MA100 in a sustainable manner, which is by no means the case at the moment.

Altcoins evolve in line with Bitcoin and Ethereum

H4-scale cryptocurrency market capitalization price (excluding Bitcoin and Ethereum)
H4-scale cryptocurrency market capitalization price (excluding Bitcoin and Ethereum)

For altcoins, the situation is similar. They lateralize since the beginning of September between the 3$61 billion and 400 billion. Since the second half, prices have contracted much more with an evolution between the resistance at 378 billion dollars and the support at 365 billion. Recently, altcoins have been getting rejected on the EMA200 as well as the resistance on several occasions. This speaks to the strong situation of the sellers in the market, especially since the confluence of the EMA and the MA100 have just been lost on the downside. If a rejection occurs and the support breaks, a return will occur at $361 billion.

This is the level not to be lost if we do not want to revisit the lows of early September or even, in the event of a new catalyst, a return of altcoins towards $346 billion. In this context, we would be approaching the low point of June at 320 billion. Although Bitcoin and Ethereum will set the pace, a recovery from the EMA200 as well as the resistance will be favorable signals for nice rises on altcoins. Thus, it will be preferable to position yourself as a buyer in the short term. Of course, we must keep in mind that it is a risky environment which is unfavorable to risk-on assets.

Bitcoin continues to gain strength in the cryptocurrency market

Course of bitcoin's dominance against other cryptocurrencies on a 1D scale
Course of bitcoin’s dominance against other cryptocurrencies on a 1D scale

For bitcoin, things are a little more active. He managed to preserve the 40.6% bouncing off the EMA trio. The latter determine relatively well the trend that is emerging on dominance. In recent days, the resistance at 41.32% was broken on the upside! Bottoms and rising tops have been inscribed, allowing Bitcoin register a bullish momentum vis-à-vis its dominance by sucking up some of the capital from the market.

The current challenge is simple for Bitcoin: preserve the freshly won resistance to make it a support, especially since this level is currently in confluence with the EMA13. The other challenge is to avoid a false breakout of the MA100, dominance must go back above 41.5% as quickly as possible. If this happens, a trend reversal could take place in the medium term. However, the other issue is the daily EMA200, this will be the last step before a potential return of dominance on the blue zone to 43.2%.

A rising dominance will be an opportunity for the king of cryptocurrencies to stand out in a market that has been fairly resilient for several months. However, with capital being sucked in, altcoins would be sidelined with less interest from investors. Of course, in parallel, it will be necessary to monitor the ETH/BTC pair, which we will do now.

Ethereum maintains its weak position against Bitcoin

Price of Ethereum against Bitcoin at 1D scale
Price of Ethereum against Bitcoin at 1D scale

For the moment, the bearish scenario established for several weeks continues to hold its course. Local resistance in confluence with the 200 EMA has not been picked up. Ethereum continues, against Bitcoin, to evolve below the EMA 13, especially since the attempt to rally the MA100 is a failure. Thus, the price is currently compressing between the EMA13 and the local support at 0.0674 BTC. A release will take place very soon. If it goes up, it will probably be yet another retest of red resistance while preserving the bearish momentum the pair has been in for several weeks.

However, if the local support comes to let go, the objectives will be the same as last week with a return to the blue pivot zone first. In the event of a violent drop, everything could be linked with a return to 0.0594 BTC. In this framework, Bitcoin will continue to take the role of market leader and would be a major determinant in the dynamics of altcoins. It was the opposite in August when Ethereum outperformed Bitcoin. Each increase also allowed altcoins to go into the green and register, in some cases, double-digit increases.

Exchange tokens no longer on the rise?

Exchange Index Perpetual Futures 1D Scale Price
Exchange Index Perpetual Futures 1D Scale Price

To complete the analysis, let’s look at theFTX index which includes a basket of cryptos from exchanges. It is a good way to gain exposure to this sector by reducing the risks when exposed to a single asset that is volatile. Our analysis dated a few weeks ago was correct since the bearish bias was confirmed. After a loss of the blue pivot zone which was in confluence with the MA100, the index can no longer overcome it, which makes it a key resistance at the moment.

Since the end of August, the index has been rejected on the group of EMA 13/25/32. A break up of these as well as the resumption of the pivot zone would be an interesting signal for a reversal of the downtrend. However, this bias should be preserved given the current price dynamics. If the $6235 is brought down, the index will likely pull back to the July local support at $5820.

Here we are at the end of this new point on the cryptocurrency market. Unfortunately, you will find that the situation is very similar to previous weeks. The market is evolving under the sign of operators’ fatigue as well as thewaiting for US inflation figures over a year. Obviously, the new week will be busy, it will be important and will perhaps give the starting signal for the return of volatility. In this context, the best thing to do is to protect your capital. Have a good risk management and do not try to quit or double in such an uncertain market.

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John R. Zepeda

I have extensive experience working as a content writer in the areas of cryptocurrencies and finance, where I create interesting pieces that both inform and engage their audiences.

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