Now, let’s continue our cryptocurrency market analysis routine. The goal is simple: to understand the current structure of the market and to determine, if possible, some scenarios so as not to be surprised during the coming weeks. Does Ethereum have a strong influence on the market? So far, altcoins have been able to extend a rebound that has started in recent days. Will it continue? Let’s go straight to our charts.
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The market has broken through its first resistance, but it is not over yet.
Since last week, the market has managed to remove itself from the resistance of 963 billion dollars where it has advanced for several weeks. By taking the Fibonacci of the oscillation that is within the range, we know the first goal which is 1.618 of the Fibonacci. However, it has been achieved. So what’s next?
From now on, to preserve the strong trend in general, the market should not return below 963 billion. Otherwise, it looks like a false bullish breakout and a re-entry into the range. Soon, the market will need to rally back to $1071 billion to continue the advance. This will allow us to get back under support in summer 2021 which will likely act as a resistance to the market.
A daily bullish trend in altcoins thanks to Ethereum?
If we remove the weight of Bitcoin and Ethereum from the market capitalization, the structure is different. Currently, on a daily scale, altcoins are in a bearish swing pattern with a high of $690 billion and a low of $320 billion. However, within this bearish swing, we have an internal structural strength. Breaking a high of $393 billion, altcoins registered a new high of $410 billion as well as a new low of $379 billion.
Since the internal structure is strong, the possibilities of an upward continuation are very important. Thus, by breaking the current high, altcoins can free themselves from a previous support that is at the confluence. This will allow the market to continue its strong pullback from the swing pattern which, I remind you, is bearish. However, with a breakout of $379 billion, the internal structure will be bearish.
Bitcoin is still dominating a bearish situation
Bitcoin has been developing, since last week, in the same dynamic. It confirmed the downtrend in which it was registered with a low and a high lower than the previous one. This is the basis of a downtrend. Thus, with Bitcoin losing strength, altcoins are taking advantage of it to absorb some capital from the market. Currently, there should be a bearish bias to avoid trend reversal. Therefore, if bitcoin’s dominance breaks from the current low, we will see a continuation of the downtrend. In this case, we can make a first goal to return to the dominance of bitcoin at 41.32%. It remains to be seen, once it returns to this level, if the price will continue to fall or if it will return.
To hope for a return to the rise of bitcoin dominance, the price must break from its peak of 43.56% to change the structure. This will allow, on the other hand, to recover the pivot zone that serves as support and resistance for several months. However, most of the movement is yet to be played. To hope for a strong recovery of Bitcoin on a larger time scale, it should break out from the previous peak of 44.46%. This level now acts as resistance.
Ethereum, the reason for the rise of altcoins?
As with altcoins, Ethereum’s swing pattern is bearish against Bitcoin. However, for several days, the main asset of decentralized finance continued to be colored and removed from some technical levels. With the daily pattern currently strong, Ethereum has been in its pullback for some time, allowing altcoins to take advantage of this bounce. This undermined, similarly, the dominance of bitcoin.
Ethereum is currently at a technical level where the price has been reacting since August 2021. Can it overcome it? If it succeeds, it will register a new peak that will make it possible to extend the daily trend. But this rebound, how far can it go? Theoretically, ethereum is in a bearish swing pattern against bitcoin, it should stop at the swing high (red zone) between 0.075 and 0.076 bitcoin. However, it could be short-term on a bearish breakout in the internal structure. For this scenario to happen, the previous low must be broken.
As for shitcoins, I must admit, it is always difficult to get the temperature of this market because of the many exotic cryptocurrencies to be found. For now, it should be understood that the weekly swing structure is bearish as well as the internal structure. As for the daily swing pattern, it is also bearish. Therefore, only the daily internal structure is strong. Currently, the price of the Shitcoin Index is at the upper limit of the swing structure. This is an important moment when we consider two scenarios:
The first is a bullish breakout in the swing structure (price closes above $2745). This will allow for a different daily swing pattern. In addition, if the index manages to overcome 2912 dollars, it will also allow a change in the internal weekly structure so that it is strong. Thus, new bullish targets can be considered. However, the most likely scenario is a reversal of the daily internal structure with a breakout below $2418. This allowed the index to complete the daily pullback and towards the low point of the daily swing pattern at $1676.
Here we are at the end of the crypto point for this week! Hope this sheds some light on some gray areas regarding the current situation in the cryptocurrency market, be aware of the weekly close tonight as well as the monthly close approaching! At the moment, Ethereum continues its strong pullback, taking altcoins in its path. However, the asset is reaching major technical levels against bitcoin. Is the trend starting to wear off? Also continue to monitor the dominance of bitcoin to prepare, if necessary, for a change in the situation. In any case, if you want to read our latest technical analysis of Ethereum against the dollar, feel free!
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