Victor Cobra Calls The Shots (Again) - Crypto Update 1/31/2020
Hey, it's been a while. As I mentioned in my last video, my life has gotten extremely busy, so I haven't been able to consistently update on here. I've created enough content on TradingView in the last year to the point where I don't think it's really necessary for me to update as frequently. I really like to focus on those larger timeframe moves anyway. Whales make money off long term swings, not short term ones. There's not enough liquidity for them to enter positions on cryptocurrencies at once, so what you get is a long period of price suppression, followed by a ridiculous mania phase, as we saw with the last bubble. Since the beginning of 2019, I successfully called the Bitcoin bottom in the $3K zone, the June top at $13.8K, and the recent bottom for Bitcoin and Litecoin. I also called the ultimate Litecoin retrace towards $40-50 well in advance of the 2019 top above $140. You can read through all my material to see which coins I've been following, as well as my views on Bitcoin dominance and the crypto market cycle.
I first fell in love with doing TA on crypto because it's purely psychological. Crypto is a socioeconomic experiment. The fact that it offers another possible place to park monetary value may be enough to create continuous long term growth. In this way, the pure speculative nature allows crypto to be the perfect place to observe market behavior. Fundamentals often don't apply at all.
Originally, I was going to post a video along with this writeup but the 20 minute video I recorded came out spotty. The audio kept on skipping and I don't think it did my analysis justice. So, you'll have to settle for this rather long written update. This analysis will cover (almost) everything: Bitcoin, TOTAL, TOTAL2, the Market Cycle, and even bearish possibilities for crypto.
Bitcoin Analysis
Now onto the analysis. Let's start with Bitcoin. Big Daddy has finally broken the bearish channel and headed up close to my final short term target near $9.7K. Anywhere between $9.5 and 9.7 would have been a good place to take final short term profit on leveraged trades from the 7K zone. Now we have a lot of breathing room in either direction. Firstly, we can easily retest the 8800-8900 level on a pullback. This would allow both Bitcoin and TOTAL2 (altcoins) to confirm the 200d MA as support for bullish continuation. If that can't hold, we'll be looking at a bearish picture, but right now I'm assuming we're beginning Phase 2 of the market cycle, where Bitcoin and alts both perform well, with alts outperforming by a modest amount. Most people will agree that Bitcoin needs to break above $10.5K in order to signify a reversal. It could take several weeks or mere days for this to play out. There's really not much to say, aside from the fact that things are looking pretty good at the moment. As I said in the beginning, I'm much less interested in what happens in the short term, even though I did accurately call the recent move up. From here, things feel less certain until some major long term resistances are breached.
From a technical standpoint, oscillators don't look too overheated. The stoch RSI only just reached the top, which could indicate further upside in the days to come. In terms of Moving Averages, we want to see the ribbon form to support a bull run - 200, 100, 50, 9 from bottom. The MA ribbon is beginning the process of alignment for Bitcoin, which should support future price appreciation in the wake of this long price discovery period. In order for this alignment to occur, Bitcoin would actually need to make a pretty massive move from here.
You can see here how the MA ribbon alignment perfectly supported the entire previous bull run:
Total Market Cap Analysis
My projection for the total market cap is still $500-700B for the next major peak. I'm not certain about timeframe. It depends on whether we continue heading straight up here or correct and consolidate a bit more first. It depends on the timing of if and when Bitcoin breaks $10.5K. It also depends on the degree to which altcoins outperform Bitcoin in this part of the cycle, if at all.
Zoomed in, you can again see how important that $230B level is for the market. We may even have to test it again soon before further price appreciation.
Altcoin Analysis
As for alts, Bitcoin dominance continues to look weak. It appears to be so far unable to get above the 200w MA, and the MACD is heading down towards the zero line. It's also very close to closing a weekly candle below the 2-year uptrend for the first time ever. Of course, it can continue to move sideways and perhaps slowly down for a while, but I still believe we saw the top for dominance in 2019, until proven otherwise.
TOTAL2 is above the really important $80B level I've been talking about. This resistance is similar to $230B for the total crypto market cap, in the sense that it's a major point of control. The weekly MACD also just flipped green, so perhaps we test some of those June highs sooner rather than later, particularly if dominance declines. I'd really like to see the weekly candle close at or near current levels. Above would be even better.
Now here are some individual altcoins and their charts:
ETH/USD has reached the important $180 level. I'm interested to see whether the broadening wedge I've drawn has any merit. If so, ETH may next find resistance close to the $200 level, and if it breaks above that, the next horizontal resistance lies around $255. Above that, Ethereum can tackle $300+. On the downside, I don't really want to see it head much below $160 again. Interestingly, there has been unusually large volume for ETH/USD and ETH/BTC on Poloniex for a while now. This is perhaps why the TOTAL2 reported volume is so large, compared with even the 2017 bubble.
ETH/BTC is finally out of the first downtrend (pink), but still has the longer term downtrend to contend with (orange). The blue box shows the enormous resistance zone the ratio needs to clear, in order to have a much larger move to the upside in the foreseeable future. Anywhere in that blue box is a potential short term target for a breakout, but there are important levels at 0.033, 0.036, and 0.04.
XRP/BTC is interesting. It still has plenty of room to fall, even 50% towards 1200 sats. There's a major demand zone that hasn't been tested in quite some time (maroon box). On the other hand, we're holding just on top of this zone. If XRP/BTC moves up here, it will confirm a higher low on bigger timeframes. Either way, I expect XRP/BTC to perhaps test the supply zone (blue) again eventually. The goal with trading alts should generally be to buy as low as possible and sell in the established long term demand zones.
XLM/USD is still in that long term downtrend. The only hope for it here is if Bitcoin dominance breaks down without the entire market correcting in USD value. There's hope for XLM if it can close above the 200d MA (blue), just above $0.063.
NANO/USD looks much better, having reclaimed the $0.70 and even $0.75 long term support level. If it breaks that downtrend, it can probably go on a decent sized run. It also needs to break its 200d MA. This setup can easily fail if the market decides to make a larger correction already.
NEO looks decent, having sustained a breakout from its long term downtrend. I'd like to see it continue to hold current levels and ultimately move up towards $14. If $14 breaks, $20 is next, followed by $32.
LTC appears very strong, above the 200d MA again and the $66 resistance level. It may need to retest $60 again, but I don't think it's unreasonable to expect it to head up towards $93-100 next.
VET is still in a downtrend, and is having a hard time holding above the 100d MA now (green). It really needs to close a daily candle above soon, in order to avoid testing the 200d MA again, around $0.005. I'm hoping that if the market continues to look bullish, VET will break out once and for all and head towards some of my higher targets.
Market Cycle Analysis
Lastly, as I wrote in my most recent market cycle update, I expected alts to start at least slightly outperforming Bitcoin from here on out. I don't expect them to go parabolic right away necessarily, but I do think that we can see many of them slowly start to creep up on their ratios, until we reach the confirmation of a new crypto bull run - when Bitcoin tests the ATH. If this cycle behaved like the last, we'd see alts go truly parabolic at that point, perhaps even causing Bitcoin dominance to head to a new low. If retail mania is to once again occur in this market, I expect alts to "do it again." On the other hand, we've seen since the middle of 2019 bigger money is in control. This is evidenced by the pathetic low volume for most altcoins, as liquidity attracts bigger players to the larger caps. Many lower cap cryptocurrencies (including my only low cap - SLT) continue to bleed out on low volume. I'm still not abandoning that position though, since it's only 4% of my portfolio and I can wait for the whales to do their thing, since I believe it's just bots manipulating the price down at this point.
At least some liquidity needs to return to alts for them to really go nuts. This is why we've seen big caps move first, followed by some medium caps today, and perhaps eventually some of those micro caps will make moves. In 2018, some micro caps only went up once the entire bull run was done, since there was a lot of profit to throw around in the market. I would argue that this flow of money from one group of cryptocurrencies to another is part of this whole cycle.
Here is where I believe we are in the cycle, based on my own VERY speculative analysis:
Zoomed in you can see that I don't necessarily think Bitcoin will test ATH this year. If it makes a new high, it may only be slightly above June 2019 prices. Meanwhile, I think during this period, altcoins could recover quite nicely and exit their bottoming period.
Bearish Angle/Rant
If stocks collapse and if the global economy goes into a recession, illiquid assets like crypto may either do very well or suffer. There's no way to know for sure. Lack of liquidity can cause prices to inflate if the asset is in high demand, due to the "premium" investors will pay to acquire it at any cost. We saw this at the end of 2017, when it became extremely difficult to access certain crypto exchanges to buy specific coins one has all of a sudden heard about on the news, or on Reddit. This only increased the FOMO. If our entire global payment system becomes digitized and cash disappears, we might also see crypto become an unregulated alternative to digitized national currencies.
On the bearish side of things, the market may eventually decide that crypto has no inherent value, and that it was all just a silly experiment. A global recession may also scare people away from buying assets that have no everyday use. Time will tell. All I can do is speculate about different possible scenarios, and analyze market behavior.
As I wrote in a previous article, very few people in the world can even own a significant amount of crypto, so I think it's likely to only emphasize the wealth gap, rather than close it. This is why I appreciate Stellar, which makes an effort to hand out tokens to new users. The inability of crypto to be accessible to those who may need it the most may ultimately become its downfall. Crypto may end up just further emphasizing global inequality. As I continue to lurk around in this space and as my community of friends grows, I hope I can be a positive force here and push for more financial inclusion.
Conclusion & Disclaimer
This is not financial advice. This is meant for education, speculation, and entertainment only. Hope you enjoyed reading. I'm not sure when I'll be able to post another update, so I tried to cover as much as possible. Linked below are a ton of my favorite posts to date. I have mountains of content that goes well beyond what I listed at the bottom. If you nerd out on this stuff like I do, please go ahead and give my posts a read. I'm quite proud of the analytical work I've done and I love sharing it. Times have changed, so I can't post here as regularly, but I don't regret my time spent in this market, and I don't have any plans to go away permanently.
Thank you for your support! Until next time...
-Victor Cobra
I first fell in love with doing TA on crypto because it's purely psychological. Crypto is a socioeconomic experiment. The fact that it offers another possible place to park monetary value may be enough to create continuous long term growth. In this way, the pure speculative nature allows crypto to be the perfect place to observe market behavior. Fundamentals often don't apply at all.
Originally, I was going to post a video along with this writeup but the 20 minute video I recorded came out spotty. The audio kept on skipping and I don't think it did my analysis justice. So, you'll have to settle for this rather long written update. This analysis will cover (almost) everything: Bitcoin, TOTAL, TOTAL2, the Market Cycle, and even bearish possibilities for crypto.
Bitcoin Analysis
Now onto the analysis. Let's start with Bitcoin. Big Daddy has finally broken the bearish channel and headed up close to my final short term target near $9.7K. Anywhere between $9.5 and 9.7 would have been a good place to take final short term profit on leveraged trades from the 7K zone. Now we have a lot of breathing room in either direction. Firstly, we can easily retest the 8800-8900 level on a pullback. This would allow both Bitcoin and TOTAL2 (altcoins) to confirm the 200d MA as support for bullish continuation. If that can't hold, we'll be looking at a bearish picture, but right now I'm assuming we're beginning Phase 2 of the market cycle, where Bitcoin and alts both perform well, with alts outperforming by a modest amount. Most people will agree that Bitcoin needs to break above $10.5K in order to signify a reversal. It could take several weeks or mere days for this to play out. There's really not much to say, aside from the fact that things are looking pretty good at the moment. As I said in the beginning, I'm much less interested in what happens in the short term, even though I did accurately call the recent move up. From here, things feel less certain until some major long term resistances are breached.
From a technical standpoint, oscillators don't look too overheated. The stoch RSI only just reached the top, which could indicate further upside in the days to come. In terms of Moving Averages, we want to see the ribbon form to support a bull run - 200, 100, 50, 9 from bottom. The MA ribbon is beginning the process of alignment for Bitcoin, which should support future price appreciation in the wake of this long price discovery period. In order for this alignment to occur, Bitcoin would actually need to make a pretty massive move from here.
You can see here how the MA ribbon alignment perfectly supported the entire previous bull run:
Total Market Cap Analysis
My projection for the total market cap is still $500-700B for the next major peak. I'm not certain about timeframe. It depends on whether we continue heading straight up here or correct and consolidate a bit more first. It depends on the timing of if and when Bitcoin breaks $10.5K. It also depends on the degree to which altcoins outperform Bitcoin in this part of the cycle, if at all.
Zoomed in, you can again see how important that $230B level is for the market. We may even have to test it again soon before further price appreciation.
Altcoin Analysis
As for alts, Bitcoin dominance continues to look weak. It appears to be so far unable to get above the 200w MA, and the MACD is heading down towards the zero line. It's also very close to closing a weekly candle below the 2-year uptrend for the first time ever. Of course, it can continue to move sideways and perhaps slowly down for a while, but I still believe we saw the top for dominance in 2019, until proven otherwise.
TOTAL2 is above the really important $80B level I've been talking about. This resistance is similar to $230B for the total crypto market cap, in the sense that it's a major point of control. The weekly MACD also just flipped green, so perhaps we test some of those June highs sooner rather than later, particularly if dominance declines. I'd really like to see the weekly candle close at or near current levels. Above would be even better.
Now here are some individual altcoins and their charts:
ETH/USD has reached the important $180 level. I'm interested to see whether the broadening wedge I've drawn has any merit. If so, ETH may next find resistance close to the $200 level, and if it breaks above that, the next horizontal resistance lies around $255. Above that, Ethereum can tackle $300+. On the downside, I don't really want to see it head much below $160 again. Interestingly, there has been unusually large volume for ETH/USD and ETH/BTC on Poloniex for a while now. This is perhaps why the TOTAL2 reported volume is so large, compared with even the 2017 bubble.
ETH/BTC is finally out of the first downtrend (pink), but still has the longer term downtrend to contend with (orange). The blue box shows the enormous resistance zone the ratio needs to clear, in order to have a much larger move to the upside in the foreseeable future. Anywhere in that blue box is a potential short term target for a breakout, but there are important levels at 0.033, 0.036, and 0.04.
XRP/BTC is interesting. It still has plenty of room to fall, even 50% towards 1200 sats. There's a major demand zone that hasn't been tested in quite some time (maroon box). On the other hand, we're holding just on top of this zone. If XRP/BTC moves up here, it will confirm a higher low on bigger timeframes. Either way, I expect XRP/BTC to perhaps test the supply zone (blue) again eventually. The goal with trading alts should generally be to buy as low as possible and sell in the established long term demand zones.
XLM/USD is still in that long term downtrend. The only hope for it here is if Bitcoin dominance breaks down without the entire market correcting in USD value. There's hope for XLM if it can close above the 200d MA (blue), just above $0.063.
NANO/USD looks much better, having reclaimed the $0.70 and even $0.75 long term support level. If it breaks that downtrend, it can probably go on a decent sized run. It also needs to break its 200d MA. This setup can easily fail if the market decides to make a larger correction already.
NEO looks decent, having sustained a breakout from its long term downtrend. I'd like to see it continue to hold current levels and ultimately move up towards $14. If $14 breaks, $20 is next, followed by $32.
LTC appears very strong, above the 200d MA again and the $66 resistance level. It may need to retest $60 again, but I don't think it's unreasonable to expect it to head up towards $93-100 next.
VET is still in a downtrend, and is having a hard time holding above the 100d MA now (green). It really needs to close a daily candle above soon, in order to avoid testing the 200d MA again, around $0.005. I'm hoping that if the market continues to look bullish, VET will break out once and for all and head towards some of my higher targets.
Market Cycle Analysis
Lastly, as I wrote in my most recent market cycle update, I expected alts to start at least slightly outperforming Bitcoin from here on out. I don't expect them to go parabolic right away necessarily, but I do think that we can see many of them slowly start to creep up on their ratios, until we reach the confirmation of a new crypto bull run - when Bitcoin tests the ATH. If this cycle behaved like the last, we'd see alts go truly parabolic at that point, perhaps even causing Bitcoin dominance to head to a new low. If retail mania is to once again occur in this market, I expect alts to "do it again." On the other hand, we've seen since the middle of 2019 bigger money is in control. This is evidenced by the pathetic low volume for most altcoins, as liquidity attracts bigger players to the larger caps. Many lower cap cryptocurrencies (including my only low cap - SLT) continue to bleed out on low volume. I'm still not abandoning that position though, since it's only 4% of my portfolio and I can wait for the whales to do their thing, since I believe it's just bots manipulating the price down at this point.
At least some liquidity needs to return to alts for them to really go nuts. This is why we've seen big caps move first, followed by some medium caps today, and perhaps eventually some of those micro caps will make moves. In 2018, some micro caps only went up once the entire bull run was done, since there was a lot of profit to throw around in the market. I would argue that this flow of money from one group of cryptocurrencies to another is part of this whole cycle.
Here is where I believe we are in the cycle, based on my own VERY speculative analysis:
Zoomed in you can see that I don't necessarily think Bitcoin will test ATH this year. If it makes a new high, it may only be slightly above June 2019 prices. Meanwhile, I think during this period, altcoins could recover quite nicely and exit their bottoming period.
Bearish Angle/Rant
If stocks collapse and if the global economy goes into a recession, illiquid assets like crypto may either do very well or suffer. There's no way to know for sure. Lack of liquidity can cause prices to inflate if the asset is in high demand, due to the "premium" investors will pay to acquire it at any cost. We saw this at the end of 2017, when it became extremely difficult to access certain crypto exchanges to buy specific coins one has all of a sudden heard about on the news, or on Reddit. This only increased the FOMO. If our entire global payment system becomes digitized and cash disappears, we might also see crypto become an unregulated alternative to digitized national currencies.
On the bearish side of things, the market may eventually decide that crypto has no inherent value, and that it was all just a silly experiment. A global recession may also scare people away from buying assets that have no everyday use. Time will tell. All I can do is speculate about different possible scenarios, and analyze market behavior.
As I wrote in a previous article, very few people in the world can even own a significant amount of crypto, so I think it's likely to only emphasize the wealth gap, rather than close it. This is why I appreciate Stellar, which makes an effort to hand out tokens to new users. The inability of crypto to be accessible to those who may need it the most may ultimately become its downfall. Crypto may end up just further emphasizing global inequality. As I continue to lurk around in this space and as my community of friends grows, I hope I can be a positive force here and push for more financial inclusion.
Conclusion & Disclaimer
This is not financial advice. This is meant for education, speculation, and entertainment only. Hope you enjoyed reading. I'm not sure when I'll be able to post another update, so I tried to cover as much as possible. Linked below are a ton of my favorite posts to date. I have mountains of content that goes well beyond what I listed at the bottom. If you nerd out on this stuff like I do, please go ahead and give my posts a read. I'm quite proud of the analytical work I've done and I love sharing it. Times have changed, so I can't post here as regularly, but I don't regret my time spent in this market, and I don't have any plans to go away permanently.
Thank you for your support! Until next time...
-Victor Cobra
Comment:
TOTAL2 hasn't experienced the double bullish cross yet, but it looks like it should within the next week or two.
Comment:
Wow, the crypto market continues to look quite strong. The next resistance (if it can hold above $270B here) isn't until near June 2019 highs. Perhaps a drop and test of $230-250B would be healthy here, but if we're beginning the first major wave up for a bull market, it can really go much further than most people are expecting.
Comment:
For continuation, TOTAL2 really needs to hold above the 100w MA through the weekly close. This is the moving average that held the market down in June 2019.
You can also see here how the proper bullish MA alignment supported the previous bull market: