Two separate charts taking a top-down view across the wider crypto market may provide clues as to where the altcoin asset class is headed.
Each chart shows that altcoins are at potentially their most critical moment yet, and are facing the most important weekly close yet at the end of this week.
As 2020 first got underway, altcoins broke out from two-year downtrend lines and carried on into the stratosphere with powerful recovery rallies.
The likes of Ethereum, Tezos, and Chainlink greatly outperformed Bitcoin, but eventually, all assets were caught up in the Black Thursday destruction that occurred in mid-March, wiping out all of the early 2020 gains and sending these assets tumbling back to extreme lows.
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While many individual assets had broken out of long-term trendlines, the overall altcoin market cap paired with USD was showing that the downtrend line was still intact, and could be partly responsible for cryptocurrency falling back to lows.
However, during the collapse, the breakout of the altcoin/BTC chart, depicting Bitcoin‘s dominance over the altcoin market, has held.
Coinciding with another potential, and this time sustainable breakout of the altcoin market cap, a downtrend line on Bitcoin dominance is also holding as support, potentially signaling that this weekly close could be the most critical for altcoins ever.
In the chart above, the downtrend line has been pierced by the most recent price action. The push higher from altcoins was driven largely in part by a massive XRP pump this week, along with another Ethereum rally.
The same downtrend line on the total crypto market cap minus Bitcoin, showing just altcoin market cap only, clearly rejected buyers in early 2020, but the recent price action has resulted in another attempt, that thus far is holding.
In the chart below, which represents the altcoin market cap trading against BTC, also known as BTC dominance, the downtrend line was already broke through and is being retested currently on weekly timeframes.
The line holding for alts could mean that an alt season is just around the corner, and these alternative crypto assets could soon outperform Bitcoin.
But with Bitcoin’s halving, many analysts think that altcoins could get crushed by the volatility in Bitcoin, which would suggest this line does not hold and a fall deeper for alts against BTC is likely.
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However, if the BTC dominance downtrend line holds, altcoins would have no further diagonal resistance to contend with, and would have a lot larger of a chance of reclaiming higher horizontal support levels, and pushing much higher.
But it all depends on this weekly close, which is critical for both Bitcoin and alts.
Published at Thu, 30 Apr 2020 17:30:45 +0000