Cryptocurrencies on February 19, 2018: outlook


*I don’t trade cryptocurrencies. The best strategy for trading a crypto bubble is a classic trend following strategy.
Here’s my outlook for various cryptocurrencies based on the aforementioned strategy.

Discretionary outlook based on charts

  1. There’s something wrong with this bounce in cryptocurrencies

4:08 pm. There’s something wrong with this bounce in cryptocurrencies.
This does not look like the start of a new bull market in crypto. This looks more like a bear market rally. Bitcoin is like the Dow Jones while alt-coins (Ethereum, Bitcoin Cash, IOTA, Ripple) are like the NASDAQ. In a normal bull market, the new upcoming players (alt-coin) should outperform the old industry standard (Bitcoin). Smaller markets (alt-coins) are more volatile than larger markets (Bitcoin), so alt-coins should outperform Bitcoin in a real bull market.
Cryptocurrencies are up today. But Bitcoin is up a lot more than the other major alt-coins.

Bitcoin is still stuck at its 38.2% retracement. 38.2%-50% retracements are very common for rallies within bear markets.

Most of the major alt-coins have retraced 38.2% or less, which is normal for a bear market rally.
Bitcoin Cash only retraced 23.6%

Litecoin retraced 38.2%

Ripple only retraced 23.6%

IOTA retraced less than 23.6% 
IOTA retraced a little more than 23.6%

The bearish case for cryptocurrencies would start to be invalidated if they make “higher highs”. Cryptocurrencies are still making “lower highs and lower lows”, which is normal for a bear market.
Read more about cryptocurrencies on February 18, 2018.

6 comments add yours

  1. Give it time, it’s only been like what two weeks! It took two months for bitcoin to drop from 20K to 6k

    • Thats what exactly what I was thinking. ONLY a 38% retracement? Does he want it to surge 60% in 2 days to sound the buy alarm?.. The more I listen to these bearish chart nerds, the more I feel like they finagle their analysis to fit their initial outlook when BTC was crashing through 6k. They all said it would double bottom and retest new lows. It never did. Now its creeping on 12k and anyone who bought the bottom has doubled their money. These guys were all wrong.. But don’t buy yet! It still fits the lower highs and lower lows bearish pattern which means we’re still in a bear market!

  2. Most smaller alt coins needs to be traded via BTC. With BTC being the portal, do you you think this is an answer to why BTC surges way higher then other alt coins?

    • That could be a reason. I’m more focused on the “lower highs and lower lows” pattern. If that pattern is broken, then it’s a big bullish sign

  3. Appreciate your insight Troy. Another consideration (not explanation) on the alts is the systemic risk trading them. In the US, BTCUSD can be traded on several FDIC insured exchanges, some of which have LTC as well (38.2 also). Probably similar on other developed economies.
    As far as I know, all the other alts you mentioned can be traded at best in XXXUSDT which is just a Crypto proxy for USD. Keeping trading cash on the sidelines in USDT is risky if the rumors are true and it blows up. When Bittrex introduces USD pairs we may see this change.
    Lastly, IOTA, XRP, and particularly BCH are very controversial in the crypto space with rather widely held negative sentiment. IOTA of staying to be regarded as failed product, XRP as massively hype token unnecessary for their product to function (eg Ripple tech succeeds but without its token), and BCH as unable to compete with BTC (its direct competitor) as BTC segwit and lightning network are adopted.
    DYOR all just adding some thoughts to consider regarding these particular coins and their retraces. Regardless, BTCISD could be pushing against macro downtrend line only to fall back into channel, or could be breaking out but only into a bull trap. Maybe breaking the bear market completely. We’ll see soon enough.
    Looking forward to reading more of your observations Troy!

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