Bitcoin (BTCUSD) (3-day/8-hour comparison)
Bitcoin had a huge selloff starting mid-day Friday, and peaking late that night. Seemingly triggered by a selloff in the stock market, the initial drop pushed the price below key levels where many stop orders and liquidations were sitting, creating a cascading event, clearing out order books, and overloading most exchanges.
On our 3-day macro range, we see a wick to the orange “neutral/continuation” zone, a good place for support to step in to give bulls hope.
After breaking through $53k support, bulls have their work cut out for them. When looking at the smaller range plotted on our 3-day chart and our 8-hour chart, we can see some confluence with bull/bear levels of interest.
A rally up towards $53k followed by a rejection down to the $38k-40k area makes a lot of sense. If bulls can manage to close some high timeframe candles above $53k, then the low is possibly in. Until then, it seems like there is likely more blood in the near future.
On a macro level, we are still bullish, but in the coming days, we are likely to experience some more jarring volatility. Open interest on leading exchanges is way down, with thinner order books, so the price is likely going to have some big swings in both directions.
Ethereum (ETHUSD) (3-day/8-hour comparison)
Ethereum has held up surprisingly well, even hitting a new yearly high on the ETHBTC pair.
We can see from our 8-hour chart that we’re nearing a danger zone and a potentially prime short entry. It is hard to say what will happen next, but ETH showing strength while BTC lingers has been a precursor for several violent moves down in the past two months. Tread lightly, and waiting for some clarity could be the best move in uncertain conditions like we have currently.
The strength of ETHBTC could mean strength for alts overall, but this morning we saw alts getting slaughtered when BTC only took a 3% drop in price. The market seems very fragile and indecisive overall, and with legacy markets looking dicey, things could get worse before they get better.
Fundamentals & Correlations (Weekly)
Not surprisingly, BTC dominance (BTC.D) is hovering around support levels, as ETH takes up more market share. These conditions may seem favorable for alts, but as mentioned above, they are often what we see before more market-wide downturns.
The US Dollar Index (DXY) continues its climb upwards, giving yet another reason to be cautious.