Altcoins Are Ready for another Round of Upwards Momentum?
The past week has been a massive week for crypto, as CZ has announced to resign as the CEO of Binance, while in the meantime a SEC Commissioner announced that the U.S. is ready for a spot Bitcoin ETF. The markets have been showing a correction as some altcoins have been falling by 10-30%, but they seem ready for another upwards move. In this update I'll talk about some altcoins and provide an overall outlook on the altcoin markets.
Altcoins Are Ready for another Round of Upwards Momentum?
Written by: Michaël van de Poppe
Bitcoin is currently continuing the fight against the resistance zone at $38,000, while altcoins have been suffering a substantial correction in the past two weeks. Some altcoins have been correcting by 10-30% resulting into tremendous buying opportunities as it's very likely that we'll continue the upwards momentum on the altcoins in the coming period. Why is that?
Well, the confidence is entirely back in the markets with the recent news from the SEC Commissioner announcing that the U.S. is ready for a spot Bitcoin ETF. Additionally, BlackRock has filed for a spot Ethereum ETF and that means that altcoins aren't death. As a matter of fact, it's actually the opposite currently, which means that projects feel more confident by releasing their news and updates as well, through which the momentum is back into the altcoin markets.
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In our previous update, we've talked about the crucial resistance at $38,000, which is pivotal for continuation for the price action for Bitcoin and that basically hasn't changed at all. It's very likely that we'll sqeeuze up massively if Bitcoin breaks $38,000. The second case is a fake-out where we drop back in the range and go sideways for a substantial period of time.
However, as a confirmation, we can see that Bitcoin's price isn't listening to the bearish divergence being prepared. The bearish divergence isn't valid until Bitcoin starts to make lower lows and lower highs. At this point, the resistance has been tested for four times already. It's getting very likely that the next breakout upwards is going to cause a significant breakout to $40,000 as all the liquidity is going to be taken above the previous high.
The total market capitalization of crypto is still following the path. Even though a correction seems likely, a correction of 10-15% on the total market capitalization (which we've seen in the past weeks as well) is still a tremendous buying opportunity as the upwards momentum can last for months. Given the fact that the ETF hype is probably going to accelerate from here until the beginning of January, it's very likely to expect that the run is going to last towards the green area, which is still another 20-40% from here.
After that, as mentioned, a correction seems dooming on the markets and those corrections are very natural.
The total altcoin market capitalization faces a tremendous breakout opportunity. Facing the final resistance at this point at $675 billion after which an accumulation period of more than eighteen months is going to end and result into a massive breakout.
If the altcoin market capitalization is going to provide a correction before a breakout, it's a buying opportunity. The chart of the altcoin market capitalization is very comparable to the price action we've seen previously on Chainlink and it shows what a potential breakout can do. It's to be expected that the entire altcoin market capitalization is going to double in between, resulting into a higher return for investors.
The Bitcoin dominance chart isn't changed. The focus is still heavily skewed towards Bitcoin, which is currently taking the momentum with the impending approval of the spot Bitcoin ETF. If that approval is going to occur, then it's still very likely that we'll be seeing some more momentum to Bitcoin with a breakout above $40K.
After that approval and the run, it's likely that we'll be seeing way more interest coming from the markets on Ethereum and other altcoins, as then the confidence will be going through the roof and the likelihood of an Ethereum spot ETF to be approved will increase substantially.
However, what can we expect from altcoins from here? Let's discuss three of them.
Chainlink is currently in a period of consolidation as it has been seeing a correction of more than twenty percent. This correction is normal and was to be expected after a tremendous move from $6 to $16.
In that period, as we can see, we can suspect that we'll be having some more corrections before continuation upwards, but we can also identify a few keypoints for entries. Such a keypoint is the area at $12.50-13.25. This one has held for support, through which you should be having a position already. If the markets are having another correction, then we'd be expecting to see a test at $11.50-12.00 as ultimately the optimal entry point.
In terms of upwards momentum, what can we expect from here? It's not unexpected to see Chainlink running towards $25.
Arbitrum is showing some more momentum here after a quick bounce at the $0.95 area. This area was a must-hold and a retest of the previous resistance zone.
As it held support, it's likely that we're going to have a new higher here as Arbitrum created a higher low. It will be seeking for a new higher high and that should result into a potential rally towards $1.50-1.80 on this one.
I hope you have been enjoying this Trade Letter. See you again next week!
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