This is a quick post. A month ago I wrote about the potential long term top for Ethereum's ratio against Bitcoin, comparing it with the distribution seen on the XLM/BTC pair in 2018.
Since the post, the ratio has declined over 20%, while ETH/USD has tested Summer 2021 lows ($1700). Today, ETH/BTC bounced off the 200 MA on the 3 day chart (teal). Once below, there could be unlimited downside. Although I made a couple of bullish-leaning posts today (short-term), the above chart shows significant risk still exists for the crypto market, and why I'm being cautious. I no longer own any ETH, having sold it all between $3000 and $3300.
Ethereum doesn't tend to do well against the Dollar when it's also not doing well against Bitcoin, so this can be taken as a warning. If Ethereum continues to decline here, what then does that say about the rest of the altcoins in the crypto space? The implications here are pretty serious. Still, even if ETH loses market share, it might eventually be worth considering if there will be other blockchains that take its place. Not so sure about that yet, and the technology may not even currently exist. As I wrote today, I bought some ATOM and ALGO for fun, though I may quickly abandon those.
This is not meant as financial advice! This is meant for speculative and entertainment purposes only.
-Victor Cobra
Comment
⋅
Update: ETH/BTC has the potential to confirm a longer term bottom here, but only if it can get decisively back above the secondary trendline. Strong volume off the low, showing potential capitulation. ETH itself tested the important $800 level I've been watching for months. However, it will also need to get back above that previous all-time high (near $1440) very fast.
Comment
⋅
A break below the recently tested trendline could spell disaster for the future of Ethereum, so bulls better hope it continues to hold.
Comment
⋅
Miraculously, the secondary ETH/BTC trendline held, and it's now bouncing back above the main trendline. Closing multiple days above it could send ETH/BTC to some new highs for this cycle, or even on to test all-time high. Still, strange conditions for ETH to be running this hot, though the merge is supposedly coming in September. Could easily end up being a sell the news event, but this rise is happening 2 months prior already. Who knows?
one more dump and im buying, at least temporarily if it starts crapping out again.
VictorCobra
⋅
@Crypto-Quantum-Fox, I decided to buy some tiny alt bags but honestly it's still looking pretty weak. I'll be pleasantly surprised if I can get a quick 2-3x out of them. I'm wondering whether to just abandon the trade or to double down if they make another leg lower. Hard conditions to trade. The best decision was definitely de-risking early this year. At least I have some cash.
Crypto-Quantum-Fox
⋅
@VictorCobra, man you nailed it earlier, you saw the roll over happening and pointed it out, bravo for that. yeh i think the core principles at this point are 1. play bounces up to well known MAs (if you got the skills; this is harder than it seems) 2. conserve cash and wait for bottoming structure or a strong move out of the death spiral to spend your cash. im hoping we are approaching the first big bounce zone, whether that ends up being the actual bottom or the flat before another dump like in 2018, well we'll see soon enough. this latest cascade should put us there i think. most indicators are deeply shit, usually ya get one more spike down at that point then its good to buy (major blood in the streets). thing that worries me is that sol is still at 30 or whatever, and when i first heard about it on twitter it was like $1-$3...
VictorCobra
⋅
@Crypto-Quantum-Fox, thank you. Not easy to anticipate something like that and make large moves. Completely saved my ass. Really should have sold some in April-May 2021. The problem is, I’m not as fundamentally bullish on crypto as I once was, so I have a hard time convincing myself to rebuy for another cycle. I think the domino effect will be too large this time around. But I suppose the mania and greed always return in one way or another. Interesting that you point out SOL. I think it might have some support around $19-20, so if it gets to that point maybe a bunch of alts will bounce. It seems risky trying to time it, without the strategy being to wait until the “next cycle” peak, when I’m not convinced there will be one. I feel very differently from 2018-2019. This time, most coins were unable to sustain new all-time highs, even if they went above their 2017 peaks. ETH and Bitcoin are dangerously close to confirming failed highs for this cycle, which I think throws a lot of bullish narratives overboard for a while.
Crypto-Quantum-Fox
⋅
@VictorCobra, yup i feel the same way. i think its because of the very depressing realization that all markets, including our beloved crypto become casinos constructed to move capital around from the inpatient and scared to the controllers hands. this is just inherent to capitalism and our modern values as well. this is all quite depressing to come to understand and kinda throws a bleak blanket over the 'crypto is finally our freedom' dream.. which i still believe in a way it is. the form is there now mostly (it STILL doesnt even work properly!) but its hard to even see and believe in it when the system has infected this new growth and its clearly sick. theres always another round in this type of system. it pays the handlers too well..