In 2019-2020, I managed to nail the long term top for Bitcoin dominance. Here's the original analysis:
Since I accumulated altcoins during the last bear market, I still did significantly better than had I just bought Bitcoin. Some of course did much better than others. But now that I'm scaling out of the market, my strategy is much different. I hold no more Ethereum, and if I decide to repurchase some crypto, I will wait until Bitcoin dominance is higher again. There is still the possibility of one more final low for Dominance, but I think time is running out for that to happen. I was also thinking crypto could make a run for Gold's market cap this cycle, but recent market movements have proven that Gold and Silver are still better safe haven assets than crypto. As Bitcoin loses its strong uptrend trend against other financial assets, crypto will need to prove that it's more than just about making money. A true crypto revolution would be born out of necessity, not out of excess. And this current cycle had a lot of excess. This is one of the major reasons I have become more bearish on this market.
The analysis
I've noticed some similarities in both charts and sentiment from back in 2018. I've been thinking about these similarities for a while, and as this consolidation drags on, they are becoming a bit more obvious. In July, 2018, people were still hopeful that the alts that did well recently would make new highs. That changed quickly the first two weeks of August, when many hyped projects dropped by 30-50%, even after many had already been down by 70% or more.
Although already facing significant losses, crypto investors are still hopeful that some of these projects will continue to see new all-time highs. This confidence in 2018 was bolstered by the fact that ETH/USD was holding a higher low since the decline to the March 2018 low near $360. ETH seemed to be relatively stable above $400. Today, ETH is maintaining a weekly higher low, stable above $2300. Nevertheless, the NFT bubble has yet to truly pop (and yes, I believe it's a bubble).
In addition, in 2018 Bitcoin dominance was slowly showing some signs of strength while Bitcoin itself continued to make lower highs. We're seeing similar market conditions today as dominance approaches the 50 week MA (red).
Here are the ETHUSD chart from 2018 and the chart from today side by side:
Here, you can more clearly see the bearish 9 EMA/50 MA cross (red over orange).
Below is the same comparison with the Bitcoin dominance chart:
The weekly MACD for Bitcoin dominance shows strength, even as it approaches the 50 week MA. In 2018, this breach resulted in confirming the long term bottom for dominance. Shortly thereafter, ETH began its disastrous decline from above $400 to below $100.
Before breaking down, ETH held a higher low for roughly six weeks, and it seemed that the floor could be in. Although the market can still surprise me and reverse back to the upside soon, the bearish momentum seems to have really set in, and this appears to just be a momentary pause. ETHUSD price also seems to generally correlate well with ETH/BTC. When ETH/BTC is in decline, ETHUSD does not tend to do well. This also implies that Bitcoin is not likely to trend significantly up. It was actually the rejection off the 50 week MA for Bitcoin that set off the "Altpocalypse" in the beginning of August, 2018:
Bitcoin was recently rejected just shy of the 50 week MA, despite maintaining weekly higher lows:
The TOTAL crypto market cap shows multiple rejections from the 50 week MA:
Let's see what happens! Are we about to confirm a longer term bearish trend for ETH with the first new weekly low since last summer? There would need to be a pretty strong push up from markets to reverse the trend. Traditional markets might still have another leg lower before any significant rebound. Things are shaky out there! Whether you agree with me or not, it's very important to be careful these days in markets. Sometimes the best thing to do is nothing - and just let it all unfold. The pain always comes for those with leverage.
This is not meant as financial advice. This is meant for speculation and entertainment purposes only.
-Victor Cobra
Since I accumulated altcoins during the last bear market, I still did significantly better than had I just bought Bitcoin. Some of course did much better than others. But now that I'm scaling out of the market, my strategy is much different. I hold no more Ethereum, and if I decide to repurchase some crypto, I will wait until Bitcoin dominance is higher again. There is still the possibility of one more final low for Dominance, but I think time is running out for that to happen. I was also thinking crypto could make a run for Gold's market cap this cycle, but recent market movements have proven that Gold and Silver are still better safe haven assets than crypto. As Bitcoin loses its strong uptrend trend against other financial assets, crypto will need to prove that it's more than just about making money. A true crypto revolution would be born out of necessity, not out of excess. And this current cycle had a lot of excess. This is one of the major reasons I have become more bearish on this market.
The analysis
I've noticed some similarities in both charts and sentiment from back in 2018. I've been thinking about these similarities for a while, and as this consolidation drags on, they are becoming a bit more obvious. In July, 2018, people were still hopeful that the alts that did well recently would make new highs. That changed quickly the first two weeks of August, when many hyped projects dropped by 30-50%, even after many had already been down by 70% or more.
Although already facing significant losses, crypto investors are still hopeful that some of these projects will continue to see new all-time highs. This confidence in 2018 was bolstered by the fact that ETH/USD was holding a higher low since the decline to the March 2018 low near $360. ETH seemed to be relatively stable above $400. Today, ETH is maintaining a weekly higher low, stable above $2300. Nevertheless, the NFT bubble has yet to truly pop (and yes, I believe it's a bubble).
In addition, in 2018 Bitcoin dominance was slowly showing some signs of strength while Bitcoin itself continued to make lower highs. We're seeing similar market conditions today as dominance approaches the 50 week MA (red).
Here are the ETHUSD chart from 2018 and the chart from today side by side:
Here, you can more clearly see the bearish 9 EMA/50 MA cross (red over orange).
Below is the same comparison with the Bitcoin dominance chart:
The weekly MACD for Bitcoin dominance shows strength, even as it approaches the 50 week MA. In 2018, this breach resulted in confirming the long term bottom for dominance. Shortly thereafter, ETH began its disastrous decline from above $400 to below $100.
Before breaking down, ETH held a higher low for roughly six weeks, and it seemed that the floor could be in. Although the market can still surprise me and reverse back to the upside soon, the bearish momentum seems to have really set in, and this appears to just be a momentary pause. ETHUSD price also seems to generally correlate well with ETH/BTC. When ETH/BTC is in decline, ETHUSD does not tend to do well. This also implies that Bitcoin is not likely to trend significantly up. It was actually the rejection off the 50 week MA for Bitcoin that set off the "Altpocalypse" in the beginning of August, 2018:
Bitcoin was recently rejected just shy of the 50 week MA, despite maintaining weekly higher lows:
Let's see what happens! Are we about to confirm a longer term bearish trend for ETH with the first new weekly low since last summer? There would need to be a pretty strong push up from markets to reverse the trend. Traditional markets might still have another leg lower before any significant rebound. Things are shaky out there! Whether you agree with me or not, it's very important to be careful these days in markets. Sometimes the best thing to do is nothing - and just let it all unfold. The pain always comes for those with leverage.
This is not meant as financial advice. This is meant for speculation and entertainment purposes only.
-Victor Cobra
Comment:
Update on Bitcoin:
Comment:
ETH is making another substantial attempt at a bounce, and it has broken the local downtrend I've been watching. It will now need to clear the 50 week MA (red) and hold above it in order to aim for new highs. A strong rejection from current levels would also be a bearish sign.
