BTCUSD, How to use Bitcoin Price for Trading altcoins

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Bitcoin has broken down from the rising wedge pattern, instead of breaking through a MAJOR resistance line. Feel free to scroll back on the chart to see where this (purple) resistance line comes from.

I'd like to explain how I use bitcoin price action to trade into alts. I like to use these resistances or breakdowns to jump a little into alts. This is because alts tend to boom when bitcoin begins to drop from its highest point. This is a good example of where I would jump into a few alts (like the Navcoin chart I linked below).
I will look very carefully for bounces around the support lines i have drawn out (purple dashed lines). If a bounce occurs around here, I'll be looking to take profit or partially exit some of my new alt positions.

Keep in mind that the hardfork for Bitcoin is a little over a week away, so Bitcoin could very well continue it's massive bullrun to reach upwards of $8000. If Bitcoin has an hourly candle close above my resistance line, I will consider exiting the majority of my positions.

Feel free to ask questions below, or to propose your own ideas about what may happen. I enjoy discussions on technical and fundamental analysis .


Hey! I like your charts - and I'm sorry about TV deleting your old posts, I was following them. I'm having trouble understanding why the alts are falling with bitcoin this time. It seems that lately they are being pushed up and down along with it rather than going the opposite direction. What are your thoughts about that?
Thanks and keep up the good work!
+1 Reply
ecoinamist ivnamei
Market landscapes changes all the time, so it's important to stay adaptable and to question previous notions.

At this time, it would appear that man people are taking profits and going back into fiat. This would mean people could be going from altcoins to bitcoin to fiat.
If this is the case, this would cause both bitcoin and alts to drop together. If these same people want to get back into alts, then they'll do the same in reverse, which could cause both to go up if they hold both bitcoin and alts.

In addition, most of bitcoin movement lately has been essentially sideways movement between 12k and 15k, rather than any big moves up or down.

Thanks for following my charts, I hope they have helped you :)
Great analysis and trading tip! But I fail to understand why would btc fall post the fork. Should it not continue the bull run because of a tech improvement?
ecoinamist rony.kris
Hi @rony.kris,

Great question. Even when price is pumping due to a very influential event, there are always corrections, which moves the price down temporarily. This creates a bull channel of overall upward price movement (higher highs, and lower lows). This idea is for those who would like to catch one of these 'healthy' dips in order to get a better entry point on bitcoin, or to short bitcoin by entering the altcoin market.

That being said, we will most likely see bitcoin's price continue to go up until the hardfork occurs. Catching these key resistances and supports can help to acquire more bitcoin along the way. Additionally, if this resistance ends up not being broken, our best entry points on altcoins can be gained trading this current channel.
ecoinamist rony.kris

Wow, totally read your question wrong. My comment above is answering why bitcoin would drop in price before the fork occurs. I'll answer your actual question here.

Why Bitcoin would drop in price after the fork:
1) Many people are pouring into bitcoin (therefore increasing the price) because they want to collect the free coin that will be given on the hardfork date: $B2X. The most likely scenario that will occur after people secure their B2X coin, is that many people will pour back into the altcoin market. When people buy altcoins with their bitcoin, they are essentially selling their bitcoin. This selling off of bitcoin will drop the price a sizeable amount. I believe this reason is the strongest, but I can list a couple more reasons.

2) Many traders ascribe religiously to the motto, "buy the rumor, sell the news". Essentially, price is supposed to rise up until an event occurs, and then people will sell off at peak (date of event, or before the event). I can go into this concept in more detail if you're interested.

3) The hardfork is not necessarily a technological advancement for bitcoin since it's the new coin, B2X, that will have the advancements. People are worried that B2X could overtake Bitcoin, and FUD (fear, uncertainty, and doubt) can cause selling off, which causes the price to drop.

Let me know if there's anything you'd like me to clarify!

jeremyalain ecoinamist
@ecoinamist, Like a lot of folks, I'm thinking of capitalizing on the dump back into alts just after the fork, but one thing I'm contemplating is timing. Of course, we all want the free coins from the form, but do you think there's more money to be made by dumping BTC for alts, just before the fork, to catch the big alt gains?? I figure there are many many traders planning to dump right after the fork, so perhaps waiting until after the fork seems like a tight race. What are your thoughts on this?
ecoinamist jeremyalain

I definitely think there is money to be made from skipping the free B2X coins, and getting into alts a little before the fork in order to get the best entry point.
However, it's not that simple to determine, as there are a lot of risk factors at play that could hurt overall profit.

B2X Price:
This is something to keep in mind, as this will be your baseline profit to compare against, if you are to go into alts. At the time of writing this post, B2X is about %20 the price of BTC. This means that you are more-or-less guaranteed a %20 gain on your bitcoin investment if you were to stay in Bitcoin. This is not taking into consideration the additional profit you would get from the increase in price bitcoin will receive up to the hardfork. You can keep track of the B2X price here:

Altcoin Entry:
Since we have a baseline of %20 profit we want to outperform, we will have to select a solid coin or two that we believe will pump more than %20 prior to the fork. This is where things get a little tricky, because it will all be very dynamic and dependent on B2X price, and how much strong alts have dumped prior to the fork. If we see a huge dump in price, I will look into enter alts more aggressively.

Personally, since a lot of this is speculative, I will be hedging somewhere around half my capital into keeping bitcoin / B2X, and half into entering altcoins. This percentage will change depending on B2X prices, and how low altcoins are up until the fork. As I explained above, I like to enter altcoins a little more each time I think bitcoin hits my resistance line and begins a correction.

Let me know if you'd like me to clarify anything. I hope this helps!

jeremyalain ecoinamist
@ecoinamist, This is great! Thanks for the help;)
ecoinamist jeremyalain
@jeremyalain, Anytime! Good luck :)
rony.kris ecoinamist

Appreciate your response. It makes it lot clear now. you may have figured out by now that I'm a newbie, but don't want to be left far behind in the race. Nor do I want to be hidden from the underlying reasoning. That said, I'd like to hear some more from you on the 2nd possibility you mentioned above,if you have the time. Thank you very much for your explanation. Much appreciated!

Also, on another note, I've started analyzing graphs of btc eth and few other alt coins, but not sure if my analysis is right. Therefore, I am looking for some recommendation on where and how I can get some feedback on my analysis. The underlying intent is to learn the concept. Again, thank you very much for the help.
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