About 6 weeks ago, I made a post anticipating where a bounce seemed likely to occur. This was based on the long term trends for the total cryptocurrency market cap, and the resistance level from January 2021, which was tested as support. The market is up over 30% since then, and the altcoin index (TOTAL2) is up over 40%.
I also wrote an article about why I thought it could be useful to measure Bitcoin's performance versus the S&P 500, in order to understand how big could be flowing around markets.
As you can see, the crypto TOTAL market cap has maintained support in the long term bullish channel (light blue), which has existed since 2015. Bitcoin has also bounced perfectly off the trendline I drew in my SPX comparison.
The recent crash found support right at the TOTAL trendline, and a bit over 50% from the previous all-time high. If the crypto total market cap continues to maintain this trend, it can make a new all-time high before the end of the year, based on the structure from the previous bull market. Additionally, it can approach the market cap of Gold (roughly 11.5 Trillion) by the cycle peak. I think this is a reasonable goal for the space, from a maturation perspective. I won't be looking at valuations higher than that unless this goal is achieved and we see some bigger shifts in regulation/sentiment towards crypto.
On the bearish side, a breakdown from the trend could easily send the crypto market back to test the previous all-time high from 2018. That would be the next support. The market can also continue to move sideways just above the $1 Trillion level. Stablecoins may rise in dominance to maintain the support, even if Bitcoin heads to a new local low. I'm also watching DXY. It appears the USD is struggling to break a major downtrend, and contending with the bearish cross of the 100 week MA over the 200.
If DXY breaks the downtrend, that could signal some trouble for crypto, though Bitcoin has shown some resilience in the past when the dollar is strong. However, Bitcoin dominance tends to trend upwards along with the dollar. This may imply that Bitcoin is beginning to be treated as a reserve asset, while other cryptos have yet to achieve this status.
It's always important to recognize other possibilities that may not always fit our bias. Technical analysis serves as evidence for our own biases, and when we're wrong, it can also serve to humble us. Humility is extremely important in life, and in trading.
This is not financial advice! This is meant for speculation and entertainment only. As mentioned, I'm working on beginning a podcast so folks can more directly support my ability to create content. I have also recently partnered with Mudrex, and you can support me by using the referral link in my signature below. Thank you for your support!
-Victor Cobra
ความคิดเห็น
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***how big MONEY could be flowing around markets. Ah, good old typos.
@ezpi, Thanks for your comment! Maybe conservative for the long term :) But it seems that you also think it could hit Gold's Market cap, which is the point of my post. Let's see!
-Victor Cobra
ezpi
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@VictorCobra, yes - but gold is 10T so if you are saying it will hit gold, then youre saying it will hit 10T, not what you put in your chart.
either way, we both know where we're going :)
just an issue of "when"...
VictorCobra
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@ezpi, First target on my chart is around 4T, and the second green line shows 11.5T :) So it's there, just not the first step.