–Only up?– For the moment, 2022 is not really the year that all cryptocurrency enthusiasts were anticipating. After a new all-time high at the end of 2021, Bitcoin (BTC) fell towards its support. On the road, he found buyers at $33,000. At such times, Bitcoin sweeps away everything in its path and altcoins suffer. After a 52% drop in BTC from its local top, where are the altcoins? 2021 has been an interesting year with almost all altcoins exploding. Could 2022 have a good end to us? Let’s see what the graphs tell us!
Ethereum vs Bitcoin: Ethereum is winning a battle, but who will win the war?
Studying the Ethereum/Bitcoin pair is rich in lessons when looking at altcoins. Ethereum is the leader of this category. He has underperformed Bitcoin from 2018 to 2020. During this period, altcoins suffered.
The week of February 10, 2020, Ethereum signs a “W” against Bitcoin. It is a structure of reversal very powerful. Then, there are sequences of “W” with a large outperformance of the number 1 altcoin in terms of capitalization against Bitcoin. During this period, almost all of the altcoins were able to express themselves.
And now, Bitcoin or Ethereum?
The first stop (Fibonacci 0.382) is a realistic target for any asset that is retracing an up or down move. As we can see, the Ethereum/Bitcoin pair blocked at this level. Interestingly, the pair formed bullish structures in contact with this first stop. Here again, we observe “W”, a sign that Ethereum still has some under its sole. The latest weekly has triggered a possible continuing movement – also called target AB=CD – which would bring the pair to 0.12. There will be invalidation in the event of a break in the lowest of the W located at 0.055.
The market is going through a tough time, but as of this writing, the Ethereum/Bitcoin pair has nothing to do with the momentum seen in 2018. As long as the low at 0.055 holds, Ethereum remains bullish against bitcoin. This element bodes very well for altcoins that need a strong Ethereum to be able to express themselves.
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Could altcoins rise again in 2022?
Right now altcoins are in trouble, but they may not have said their last word.
The capitalization of altcoins:
The market crash in May 2021 did not disrupt altcoins as the price did a new high some months later. And it is possible that this scenario will repeat itself in the months to come. For this, the Total 2 price will have to confirm by structuring in the same way as in July 2021 (brown).
To do this, the capitalization must maintain the lowest at 856 billion dollars and then break 1.2 trillion of dollars. The scenario is materialized with the green arrow on the graph. Otherwise (red), it will absolutely be necessary to keep 600 billion of capitalization.
The chart shows altcoins against Bitcoin. It is interesting to note that the dynamic was bearish on a weekly basis in 2018. In 2022, the lows and highs are higher and higher. The dynamic has nothing to see with the one we got to know in 2018.
This pair helps to show that the altcoins failed to overcome the resistance created in 2018. Four years later, this one, materialized in brown, still stands. The momentum is bullish under resistance and that is encouraging. It will be necessary to break this level to hope for a real altseason as in the year 2017-2018. If you are interested in the subject and want to know more, a YouTube video has been made here.
The dominance of Bitcoin is highly observed by market participants. The graph reveals to where is the capital going.
Dominance fell from late December 2020 to mid-May 2021 from 74 at 39%. This drop showed the interest of players in altcoins. Since May, this is no longer really the case. We can say that we are in a tidy Between 40% and 48% of dominance. As long as the range is present, it is impossible to know where the capital will go.
Bitcoin dominance has rebounded three times on support 1. For those who wish to see the altcoins explode, it will be necessary to break this support at 40%. The more a medium is tested, the more it is brittle. The next one is about 36%. It’s the last barrier before what could be a real altseason. If it yields, this would show the confidence of the players and therefore the appetite for extremely risky assets. Using the Fibonacci extension, the breakout of the downward range gives as a target between 35% and 30 % of dominance.
Supports 1 and 2 were created in 2018. Remember that the situation was similar in 2017. The support was broken and dominance then lost more than 60%. We live in a period where altcoins are taking up more and more space with well-defined sectors (Defi, Metaverse, P2E, etc.). There are more and more solid projects who settle and who are able to glean capitalization from Bitcoin.
In summary :
The elements presented in the article show that the situation is different from the 2018 bearmarket :
- Ethereum/Bitcoin: Ethereum remains bullish against bitcoin. It could continue to outperform Bitcoin in the coming months in view of the transition from Proof of Work to Proof of Stake for June 2022.
- Total 2: the capitalization of altcoins could do a new high as was the case in the summer of 2021.
- Total 2/BTCUSDT: the pair is under resistance with some bullish structures. A break of the resistance would give a strong signal for the altcoins.
- Bitcoin dominance: it is close to support. If the range is broken on the downside, this is also a strong signal for altcoins.
There are still some uncertainties regarding altcoins. As usual in trading or investing, you put the odds on your side before making a decision while managing your risk. The market is bleeding, sure, but not much is missing for altcoins to soar. The charts are encouraging and very far from what the market experienced in 2018.
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