Welcome to the Three Ts with CoinJar. Each fortnight we explore a big Theme, an interesting Trade and some good, old-fashioned Technical Analysis (courtesy of Tom from trading gurus FX Evolution).

Bitcoin strikes back

This week’s theme is simple: don’t forget about Bitcoin. 

In the hyperkinetic world of crypto Bitcoin can feel dull and outmoded. More than that the prospective gains can feel comparatively scant. Bitcoin has only tripled in value since the start of the year? Solana has gone 100x.
But Bitcoin still dictates terms for the rest of the market. If people are excited by Bitcoin, then everything else eventually follows. If people are wary, then a crypto cataclysm is on the cards.

Fortunately, right now people are real excited about Bitcoin. The first Bitcoin Futures ETF just started trading on the New York Stock Exchange. Grayscale is planning to convert their US$39 billion fund into a physical ETF. Bitcoin notched its highest ever weekly close and is now the 8th most valuable asset on the planet. Google just announced a Bitcoin payments option, Twitter is using the Lightning Network and barely a day goes by without a new major bank announcing that it’s going to offer crypto to its clients.

The only thing that isn’t close to all-time highs are Google searches, a proxy for retail interest – and historically an indicator that the bubble is nearing its peak. Tl;dr: we ain’t done yet.

Up in USD, down in BTC

The past couple of weeks have delivered ample reminders that when Bitcoin takes the stage, it’s a real bad time for altcoins.

There are obviously exceptions, but if you’re an alt-holder the best you could have hoped for is a grim sideways chop while the Bitcoin ratio dropped into oblivion. If you were unlucky your alts dropped in value alongside the ratio, all while Bitcoin surged 30 per cent.

The reason is simple enough. Bitcoin is such a large part of the market – around 47% right now – that any move becomes a significant liquidity suck for these lesser coins as people sell into BTC. It’s happened before and will continue happening for as long as Bitcoin retains its omnipresence in the market.

However, there is a silver lining. When Bitcoin is done moving, liquidity usually returns to the mid- and low-cap coins in the form of what we affectionately call ‘alt season’. (Or ‘everyone’s a genius season’). And if that happens again, well, this week will be a long, distant memory in no time.

Clear skies in sight

Looking at the graphs and we can see exactly how strong this move has actually been. Closing at an all-time high on the weekly is a clear cut bullish sign in the mid-term, according to Tom from FX Evolution.

However, this impulse has now matched the length of the rally from the July lows. While when Bitcoin really runs it can make most technical indicators look foolish, it wouldn’t be surprising to see some consolidation here while the MAs catch up – while also giving the poor, battered alts some room to recover.

 

On that note, Ethereum (AKA king of the altcoins) continues to consolidate below the key psychological resistance at US$4k, finding a lower bound with the daily 20EMA. A definitive break above resistance would be an extremely bullish indicator, opening up the prospects of US$4400 and new all-time highs – while also potentially signifying the rotation of capital back into the alt market.

CoinJar is Australia’s longest-running crypto exchange. Since 2013, CoinJar has helped more than half-a-million Australians buy and sell billions of dollars in cryptocurrency.

FX Evolution is Australia’s premier forex, stock and crypto trading community.

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