End of the cryptocurrency bullish summer? Unfortunately, altcoins do not enjoy the same summer as they did in 2021. Only a select few other cryptocurrencies are able to outperform Bitcoin. The trend is more brittle, the participants have altered their conduct, and they appear to be attempting to protect their cash. The beginning of the academic year, however, may be exciting for cryptocurrencies, according to certain hints. The cryptocurrencies still need to reach a specific threshold for this.
Ethereum Comes In Contact With Bitcoin Resistence
One of the cryptocurrencies that has performed well in the cryptocurrency market is ether. Exchange tokens are shown resistance to Bitcoin as well. Although he is the market leader in cryptocurrencies, he is also making money from speculation in advance of The Merge.
Since May 2021, measured in 3 day time units, the pair has been in a range. Right now, every escape from the range has ended in failure, forcing a return to the range. At the resistance level, the price is constrained. To be honest, buyers would have to exert pressure to leave this area. Support is being given by the institutional bias (EMA 9/EMA 18). It now has to be confirmed by reaching a new high.
Bullish momentum is present. The bearish trendline is being crossed by the RSI. The trendline is being tested by the RSI, which should then continue to rise above it. This is the first time momentum has crossed over the negative trendline since the range was installed. Buyers can benefit from this. It has to get over the ongoing pushback that has persisted for more than a year.
Altcoins: Is a Short-Term Drop Still to Be Expected ?
A few cryptocurrencies do manage to climb, but the most are still reserved. Compared to the summer of 2021, it was significantly less optimistic. The capitalisation of alternative currency may continue to decline.
Sincerely, the price is unable to rise above the declining trendline started in early November 2021. According to the Dow theory, the momentum was once more bullish, but at the first stop’s contact (0.382 Fibonacci retracement), the momentum is once more negative. The price may be rejected at $600 billion and move into the reload zone between $530 billion and $490 billion (0.618 and 0.786 Fibonacci retracement). In the case of a comeback, resistance might come from the institutional bias crossing the bearish line.
Buyers will need to come up if the price swings back into the reload zone in order to prevent a new bottom in the capitalization of altcoins. On the other side, the momentum develops honestly above the bearish trendline and sends a bullish indication. Momentum, which contrasts the power of buyers and sellers, is no more a flimsy concept. The momentum is now working in favor of the buyers.
Dominance of BTC at a Crucial Level
Understanding where capital is moving is made easier by Bitcoin’s supremacy. Capital is moving into cryptocurrencies in case it falls. If Bitcoin’s dominance is growing, it’s because investors are drawn to it. Capital has been pouring into cryptocurrencies since early June, and the trend could continue.
Ever since May 2021, the price has been fluctuating. The price is speaking with support once more as of right now. This is the fourth time the support has been broken. We’re aware of it. A support is more likely to fail the more it is tested. Take note! By dropping below the support and rising back up to the level of the trendline, the price may veer off course. The subsequent movement would be deceptive and may indicate a fake out.
The momentum is negative. The bullish trendline was broken by the RSI in June, and the RSI is now falling. The range appears to be developed enough to try a clean break. This chart may continue to be influenced by altcoins like Ether, Binance Coin, and FTX Token that outperform Bitcoin. One may readily picture a dramatic break in the range if other currencies with smaller capitalizations start to perform as well.
Take note! Cryptocurrency trends are gloomy, similar to Bitcoin, which is unable to move over the $20,000 mark. Bitcoin will take the altcoins with it if it declines severely and hits a new low, and the dominance will increase significantly. We must be cautious given the situation.
Derivative Markets Shorter Altcoins
Determining the market phase and the players’ attitudes are made feasible by derivative markets. We can research the financing rate and the open interest for this. The funding rate is a charge system that enables you to continuously have the spot price (the purchase of actual cryptocurrencies) and the price on derivatives (contracts) close, whilst open interest allows you to know the number of open positions. The shorts pay a charge when the financing is negative, and the longs pay a fee when the funding is positive.
A negative funding indicates that players are shorting other cryptocurrencies. Additionally, as indicated by the open interest, participants have opened several spots. Short squeezing can result from negative financing and increased open interest. End of July 2021 saw exactly this take place. A short squeeze that was notable for enabling Bitcoin to reach a new record high.