Bitcoin (BTCUSD) (3-day/8-hour)
Bitcoin remains range-bound, and “choppy” with very little changed in the past weeks on the macro level.
Last week we saw our 3D green “optimal trade entry” zone hold support, with multiple tests. The longer we see price hang out down here without any significant reaction, the more nervous bulls should be. So far, even with some dramatic drops into the halfway point of this green “OTE” box, we haven’t seen any follow-through to get us past the orange “neutral” zone.
This could simply mean we will need one more flush to the $25k area before there is enough buying momentum to push through further, but if this green box gets broken, this range will be invalidated.
The more zoomed-in 8hr chart shows buy support stepping in just before our “fakeout” level for bears, which could give bulls some hope, but the picture is still unclear until we see some trending moves from BTC.
It seems as if we are rangebound between roughly $30k-$40k, until either of those levels break with a higher timeframe candle body, we are in limbo.
Ethereum (ETHUSD) (3-day/8-hour)
Ethereum has been getting absolutely beaten down for weeks while Bitcoin was remaining relatively flat, since the weekly open last night, Ethereum seems to have picked up some reversal momentum and this could be a good sign for alts in general, particularly DeFi projects that run on ETH.
Though in the macro range on our 3-Day chart, price still sits in our green “OTE” zone, the more zoomed-in 8-hr chart looks like a failed breakdown from this bear range, with support stepping in perfectly at our “fakeout level” (red-line.)
Ethereum can be a good gauge for overall alt-market interest, and a lot of what sparked the rise of alts over the past year has been DeFi platforms like Uniswap. With Uniswap volumes dropping off sharply over the past month, it’s not that surprising that Ethereum also dropped off, with less demand for gas to execute on DEX platforms.
Fundamentals & Correlations
Looking at our trusty indicators of Bitcoin Dominance (BTC.D) and the US Dollar Index (DXY), we can draw some conclusions, but nothing too definitive.
With a sharp turnaround in Bitcoin dominance from the 40% lows, it’s clear that interest in altcoins has waned a bit over the past weeks, but below 51% is still significant. Altcoins have felt the pain worse than Bitcoin in the past few weeks, and it’s possible that they also won in the race to their respective bottoms.
The US Dollar gained some strength against other world currencies last week and broke back through our diagonal resistance line, which is something to pay attention to. Forex markets tend to trend hard for a long time, so if the US Dollar is gearing up for a high time frame reversal, that could spell pain for anything priced in $USD.
However, with a stimulus plan on the horizon, this may not be a concern, as we all know when the US prints lots of money, all markets tend to go up, as the dollar takes a hit.