Crypto update
This is a market update at absolutely unprecedented times for crypto. We’re going to look at the bitcoin price chart right here. We’re also going to look at the Bitcoin dominance chart because obviously this is reversing. All coins are selling off and we want to look at the relationship between that and some key levels that you should look at in terms of the Bitcoin price and altcoin prices. To that end, we’re going to look at Ethereum because we’re getting closer to the ERC-20, which could really affect all altcoins.
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BTC update
But we’re going to get into the Bitcoin price chart right now. This is unprecedented—nine straight weeks of declines.his is the weekly chart that we have right here. Nine weeks of declines is the worst performance for Bitcoin ever in 13 years. It’s never declined for nine straight weeks in a row. We’ve just broken that record. It’s absolutely brutal, the hammering every week coming down. But just to give you some key levels, right here for this market update, we’ve drawn on about 25,000.
That’s really the only level we can see on this chart as a specific price point that we may congregate around. This is for the weekly, so keep that in mind. But looking back on the chart, there really isn’t much in terms of areas of value, support, or resistance anywhere near these levels. We’ve basically broken through all of the key levels that we were looking for, which was essentially 30k, so you can see on the chart we have a few intra-week moves right around that 30k level once, twice, and then we’re congregating around this time. The reason we’ve done this line here at 25 is because that was the LUNA blow up wick down to 25. So obviously, we recovered a lot from there and the stock market is recovering right now, so we want to look at some key economic data that is going to shape how bitcoin is traded and therefore altcoins as well.
If we go over to the daily chart, you can just see the consolidation around 30k.
So you want to switch to the day chart, and you can definitely see this right here again. You’re kind of getting lower highs right here. It’s a consolidation with a lot of buying around this kind of 28 level. So there are a lot of buyers in here, but the market’s sell-off is still going on. And we would assume if the stock market doesn’t rally or is kind of flat next week. Bitcoin’s not going to do much either, but looking at the stock market is a good proxy, but also some economic data as well.
Bitcoin dominance
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This makes sense if you think about the real long-term and the way that assets are valued. Bitcoin is the only one asset and it’s more of a store of value asset. It’s also more mature as crypto grows in general and the market becomes larger. There are going to be more players in the altcoin space in terms of networks and other types of businesses that accrue value over the long term.
So we expect bitcoin’s dominance to gradually fall over time. Of course, during a bear market, what we’ve seen is it’s gone from being down here at the lower 40% to being up at 40-47%. We are now hitting resistance here, however. It may continue for a while as a few projects that do need to be continued further kind of get sold off and never recover. It will be interesting to see whether we meet resistance here or whether we climb our way back up to maybe 50%.
We suspect over the long term. This will be a series of lower highs as bitcoin’s dominance falls gradually over the long term in a bear market. Do expect bitcoin to come down but be much better than the altcoin space in general now.
ETH/BTC
If you’re in all coins, the major thing to watch out for is Ethereum. Most qualities alts or businesses that have some sort of revenue are built on Eth or have a very tight relationship with Ethereum. And really, what we’re looking for is themerge to kind of bail out some of these alts which are just getting sold off.
What we can see here is the bitcoin Eth chart. So, Ethereum has been performing extremely well against Bitcoin for a few years now. But this is going back to May 21, literally a year ago. You can see the 12-month chart right here. Ethereum is kind of solidifying. It’s still valuable in comparison to bitcoin, and what we’ve seen here is essentially a sell-off down to kind of range lows. So again, we are at a support level just like in the bitcoin chart, so it’s really at this kind of generational support level at 30. We’re really expecting some sort of bounce here, if any again, with bitcoin dominance is moving up to resistance and Ethereum kind of moving down to this support level. Can it go lower? Of course, really specific to Ethereum is the merger, and there’s been some FUD around. So that is why this got sold. Specifically, alts and Ethereum really are specifically all about the merge going well. If that goes well, this could really bail out the altcoin space and actually see a bid come into that space again. So there are definitely a lot of eyes on the merge that is supposedly happening in August. There was a lot of fun around that and the news this week.
The economy
Before we get to that specific news, and look at some economic data, which tells us where the buyers are for bitcoin and alts at the moment, which is not here.
That is why inflation data is so important for the markets. The stock market rose towards the end of this week because inflation or some economic figures that show us inflation have just started to roll over. That’s what the FUD wants. That’s generally good because the market has been whacked by the FUD inflation coming down means that they can potentially start to ease off and become a little bit more dovish, which is going to help equities and risk assets a lot.
So that’s something that we want to see. This is used car sales just falling off a cliff. That’s good for inflation generally, so that is good news. But consumers are getting absolutely whacked.
This is the total revolving credit.
When credit goes up, that essentially means that consumers are having to borrow because things are tight, they don’t have any extra income, and so they need to borrow more on their credit cards. You look at the personal savings rate, it’s been absolutely walloped. What is this chart telling us? This is when the US government helicoptered free money for everyone.
Obviously, that coincided with bitcoin and orts rising, and you can see the savings rate just falling off a cliff right now. So this is telling us that, essentially, economic data is rolling over and inflation is going to start coming down, potentially making the FUD kind of pivot and turn more dovish because this is not great news for the economy. So what they may have to do is actually start become a little bit more dovish and start not easing, but essentially holding off all of their interest rate rises and quantitative tightening.
The reason why this chart is extremely important for bitcoin and everything else is because the main buyer of altcoins is retail, and if retail doesn’t have extra cash lying around, then there is no marginal buyer for altcoins. So that is why you see these big sell-offs until this reverses. In my opinion, we’re not going to see too much in terms of the altcoin space, you know, kind of growing and getting solid footing again. However, a lot of very clever people are saying that what we’re seeing now is really pause for thought and the FUD is going to look at this and say Ok. Maybe toward summer and the end of summer, we don’t have to keep walloping the market with interest rate rises and they can start to ease off normalization. That is why the stock market is looking a little bit healthier towards the end of this week because forward-looking six months in front is saying the FUD’s not going to be tight and bond rates and bond YIELD are telling us that as well.
Merge news
It’s a very complex picture, but we are in a bear market both from the price side and just the general sentiment side. So if you’re a long-term investor, this is when you pick up investments that you think will do well in the next business cycle or at least survive through it.
It’s difficult to buy in bear markets, but these are typically the best times to buy if you have a long-term mindset. It’s obviously very difficult to keep buying, and trying to time markets is something that I would never recommend because it’s almost impossible when it comes to Ethereum. Essentially, what happened is one of the test nets had an issue that would potentially be really quite bad if it was on the main net, but it wasn’t on the main net and if you look at some of the Ethereum devs while they’re coming out.
They’re saying why this could have been a big deal, but in the end, it was not really. The whole point of test nets is to test out these things. This is essentially a re-org that happened that would be extremely unlikely to happen on the Ethereum main net. The Ethereum merge really is the one specific actionable item that will make or break Ethereum and therefore most of the top-quality alts as well.
Well, if this gets really delayed for a long time, expect a lot more red and carnage. If this goes well and is potentially confirmed for August, we might see a little bit of a bid for altcoins based on Ethereum. It really is a very complex picture for crypto right now, and all of that speculation has completely left.
Can the economy somehow survive? Is the FUD going to pivot and become a little bit dovish and then what are the fundamentals for bitcoin in terms of adoption, the number of people using it, the number of companies that are integrating it and then the Ethereum merge? So it’s all about fundamentals and specifics. For me, all of that speculation is just not there, and so if fundamentals aren’t there, neither will the price of any of these assets right now.
[This article is a transcription of a video made by MoneyZG]
Original video: https://youtu.be/5EbEQqw91T8]
