Time to buy the dip on Altcoins?
In this update we'll focus on everything surrounding the altcoin markets. They have been suffering, but a select group of altcoins have been doing well, so are we expecting continuation on these assets?
Altcoins eager for a buy the dip entry or are we waiting for another crash?
Written by: Michaël van de Poppe
This week has been ultra boring for everything in the altcoin markets. Chainlink has been correcting, while also the rest of the markets haven't been providing any strength at all. On the other hand, we can see that specific altcoins are heating up for some momentum. Optimism is acting in a strong manner, while also Arbitrum looks ready for a bounce upwards.
Chainlink might be in a for a buy the dip procedure and additionally Shiba Inu is heating up, does that mean that we'll start to see some strength on Dogecoin too if Elon Musk announces his trading platform on X?
The overall outlook on the Bitcoin dominance chart is still unchanged since the previous week.
History repeats itself, or often rhymes. In that case, I've recreated the BTC Dominance chart. The sentiment is clearly comparable to previous cycles. A year before the halving, most investors in the crypto markets have vanished away and are not interested into crypto anymore, especially not into altcoins. In that case, every move upwards is a sell-off moment for altcoins as people want to get out (that's also why the thesis of newer altcoins to have a higher ROI than older altcoins is very reasonable).
The Bitcoin dominance chart tells you a few important lessons. First of all, the interest in altcoins is on the lowest level, and that's already to be seen in the Bitcoin pairs as these are on cycle lows. Comparable to the price action in 2019, but also in 2015. Cycles repeat themselves in a similar manner.
Additionally, from a technical perspective, we can see that we've got a case of upwards rally in 2019 and now in 2022/2023, resulting to a resistance around the 200-Week MA and EMA. I've mentioned before on Twitter that rallies often happen when most people are still expecting the bear market to continue to last, on every rally that's being created.
In the current price structure, the Bitcoin dominance chart repeats the pattern from the previous cycle, as we can see that we're heading around the 200-Week MA and EMA, while most people are still not interested in altcoins or feeling like they'll continue to go down.
I'm not saying that you should invest everything into altcoins now, but atleast we can see that the cycles are repeating themselves, while Bitcoin is acting within a very small price range.
The total market capitalization for crypto acts within the accumulation range, but above the 200-Week MA and EMA at this point. Technically speaking, you'd want to see this continue as an important support level, even if we're having this small correction taking place now.
In that case, if the total market capitalization stays above $1T, we can definitely say that we're just having a regular correction inside and upwards trend. Why would I say, an upwards trend?
If you look at this new chart, your view is changing, right? You'll automatically create a new bias based on what you see, but let's look at the structure of the markets on a weekly timeframe. Since the peak in November 2021, we've had a downwards trend.
A destructive downwards trend as it took only 6 months to drop by 70-80%. On the other hand, since the collapse of FTX in November 2022, price has made a slightly new low and started to rally back upwards. You could argue that it's deviation beneath the low.
More importantly, total market capitalization of crypto broke back above the 200-Week MA and EMA and started making higher highs and higher lows, showing the strength is back in the markets. As long as the market capitalization stays above $1T, I think we'll have to continue towards $1.6T. Despite the fact that most people assume we'll have a massive breakdown taking place.
What are we looking at in terms of the market environment? Let's have a look at Arbitrum and Chainlink.
The USDT pair for Chainlink isn't doing anything in a bad manner here. We're actually consolidating on a solid support level.
We've had manipulation beneath the range low, which has been acting as a support for almost a year. Drop beneath that level showed that buyers stepped in, after which CCIP was released.
In that case, if the price of Chainlink corrects towards the level of $6.65, everything is still fine. Price of Chainlink got back in the range, through which buys are there to be bought, unless proven otherwise. Why is that?
Well, if you take the previous example of the total market capitalization, then you'll need to look at the facts of the trend. In that case, currently, we're in an uptrend as the price action of Chainlink provides higher lows and higher highs. This gets invalidated beneath $6.65, but above there we'll be fine.
The BTC pair shows a similar structure. Deviation beneath the lows, through which the trend has been continuing downwards. However, quick reclaim of the level is your continuation trigger here and that's what Chainlink is currently looking for to expand.
In that case, you'd like to see the BTC pair sustain above 2200-2250 sats (which corresponds with the USDT pair). If that's the case, then we'll be fine with continuation towards the red box here.
Chainlink isn't the only one showing momentum here. We've seen that Optimism is managing itself to provide some serious momentum and that's due to the fact that newer coins are doing better than older ones as there are no bag holders in those positions looking for a way out.
If Optimism does well, you'll probably have a case that Arbitrum is going to do well hand-in-hand.
Arbitrum is currently correcting back into a higher timeframe support area and shows buyers interest, which is most likely going to continue to evolve from here.
In that regard, if Optimism moves, does the correlation hold up and Arbitrum to continue moving too? In that regard, it's almost a win-win to focus on this one as well. Currently in an interesting support zone for Arbitrum, but you would mention a case that we are looking for a break and flip above $1.17-1.20 before we get ourselves interested in this specific asset.
All-in-all, not many opportunities on the markets, but there are a few. Possibly even Dogecoin.
Next week I'll be providing some more setups, but enjoy your weekend!
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