Cryptocurrencies are amorphous, where will the market go?

The cryptocurrency market has been moving in a relatively tight range for more than a month. This situation is quite complex since the long compression of the price will necessarily lead to an explosive range exit. The longer the range, the more violent the exit could be. Investors face a situation where the market is undecided, psychology is essential in order to survive and not lose part or all of their capital. When the market is moving in a range, bad decisions can be fatal if the analysis of an asset is clumsy and the position taken is too large. Where is the market now? Today, let’s take a look at the cryptocurrency market and plans for the next few weeks.

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Will volatility be back soon?

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

The market situation has not changed since September 16, cryptocurrencies are evolving in a range between 876 billion (green zone) and 944 billion dollars (red zone). In recent days, the market has not even managed to recover the 919 billion dollars, it remains for the moment on the lower limit of the range. Moreover, since the second half of August, the price has repeatedly been rejected on the trio of EMA 13/25/32. These last materialize well the lack of vigor of the buyers for several weeks, will the market succeed in freeing itself from it?

In the event of a bullish breakout of these three EMAs and an acceptance of the price above the EMA32, we will have the first sign of a trend reversal in the market. Of course, this is not the only indicator we should rely on. In the event of a recovery from 919 billion, the market will probably rebound to the upper limit of the range (red zone), it is this level that will have to be monitored since an upward break will allow the market to take off in the direction of the MA100 which is in confluence with a technical level. However, if the market fails to overcome the three EMAs and breaks its support downwards, a new bearish run could occur towards the support below $835/845 billion.

Altcoins gradually continue to fall

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

While the total market capitalization preserves the support relatively well (resilience of Bitcoin and Ethereum), it is a different story for altcoins which keep losing capitalization over the weeks. This demonstrates an interesting element: investors favor the Bitcoin (BTC) and Ethereum (ETH)the two largest capitalizations on the market in order not to be exposed to assets that are far too volatile.

After a loss of 361 billion dollars, the altcoins have made this level a resistance, will it be resumed in the next few days? At the moment, price keeps getting rejected on the EMA trio, which demonstrates the strength of the downtrend with descending lows and highs. Altcoins returned to the support from the first half of July at 346 billion. If this level does not hold and the downtrend continues, the logical sequence will be a return to the low point of the market dated last June.

Altcoins are clearly in trouble in this market since they are riskier assets than Bitcoin and Ether which are themselves considered risk-on assets vis-à-vis certain investment classes. For them to be able to operate an upward trend reversal, the road is long since they will have, in addition to the bullish recovery of Bitcoin and Ethereum, to overcome the trio of EMA as well as the resistance at 361 billion. dollars. A return of the price above these levels will be a more favorable context for a surge of certain altcoins. In this context, a return to 378 billion dollars could be envisaged (red line).

Bitcoin continues to demonstrate its strength in this bear market

Course of bitcoin's dominance against other cryptocurrencies on a daily basis
Course of bitcoin’s dominance against other cryptocurrencies at scale Daily

Since our previous weekend market point, Bitcoin dominance has continued to trend higher. The resistance at 41.32% has been broken to make it a support. Moreover, the rebound took place in confluence with the EMA13 which is a very interesting dynamic support in order to alert us to the continuity of the trend or a potential reversal. For the moment, the trend is bullish, the troughs and peaks are ascending. This explains the maintenance of the total capitalization but the fall of the altcoins since the capital is heading towards the king of cryptocurrencies.

At this time, we have no reason to expect a fall in bitcoin dominance. A trend reversal will be very likely in the event of a return below 41.32%, the support which is in confluence with the MA100 just below. So, what is the plan for the next few weeks? We can look for a small upside slowdown with a rejection on the 200 EMA (black dotted line) before a break up that will allow Bitcoin to head towards the pivot zone at 43.2%. However, before we get there, we can identify an intermediate level at 42.56% where bitcoin dominance might slow down.

Ethereum sideways, how long will it last?

Ethereum price against Bitcoin on a daily basis
Ethereum price against Bitcoin on a daily basise

The situation has changed little for the Ethereum/Bitcoin pair. As expected, after a return to the blue pivot zone, there is a lateralization of the price between 0.066 and 0.0685 BTC. Within this zone, a pivot level has emerged at 0.0681 BTC. This one having made support and resistance, it is necessary to watch it to understand what would be the most probable dynamics of the next days. Currently, a bullish breakout has taken place. If a small rebound is confirmed, Ethereum could go up to the 200 EMA which is located just above. However, a rejection on the EMA 13 and a false break is possible, Ethereum could return below 0.0681 BTC and continue to sideways below.

It is clear that Ethereum’s situation is not easy. The underlying trend is bearish, it is unlikely to see an explosion in the price, especially since bitcoin dominance is in a good position. Thus, if we maintain our bearish bias on the asset, we will soon see a return to the blue pivot zone. This is where everything will be played since a loss of this zone will undoubtedly result in a new bearish run towards 0.0594 BTC. In this context, the situation will be unfavorable for the king of traditional finance and all altcoins: Bitcoin would continue to suck up capital, extend the range in which it finds itself while strengthening the bearish files on certain assets.

Are shitcoins in trouble?

Shitcoin Index Perpetual Futures daily price
Shitcoin Index Perpetual Futures daily price

A month has passed since the last analysis of FTX’s SHIT-PERP index. The bearish scenario we mentioned with a return to the HVN at 2170/2205 has indeed taken place. For now, we can preserve a bearish bias for the underlying trend. At present, the index has been rejected for the umpteenth time as the trio of EMA (precisely the EMA 25 which was in confluence with the HVN and the 50% of Fibonaci). This demonstrates the lack of vigorous interest in shitcoins in recent weeks. Currently, the support at $2170/2205 holds. However, in the event of a bearish break, a nice candle could occur with a return to $2057 at first.

The situation is complex for shitcoins and there are many resistances to cross before hoping for a bullish reversal. Besides the trio of EMA, the upper HVN will have to be regained. It will not be an easy task since it is confluence with the 50% of Fibonacci. However, if the index is forced to break free, the price will probably react with a rejection on the MA 100 at 2520 dollars. Of course, for the moment, we must preserve a bearish bias on this index.

Here we are at the end of this crypto point of the weekend! You can see the uncertainty the market is in right now. We are facing a long range which can strongly affect the psychology of the participants. At the same time, we have Bitcoin which continues to gain strength and crowds out altcoins from the market. The capitalization of the latter is lower and could potentially continue to fall if Ethereum is unable to regain strength against the king of cryptocurrencies. As for shitcoins, you can see the market losing interest in them. The next few days will be important, we can expect volatility to return by the end of the month for the monthly close.

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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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