It’s been a big couple of weeks for both Bitcoin and Ethereum with both breaking out and Bitcoin reaching $11.4k and Ethereum reaching $335.
Over the past few months we’ve positioned ourselves very well in advance of these big moves and are now reaping the rewards. From a fundamental perspective the advent of DeFi (Decentralised Finance: discussed in recent weeks) combined with the relentless money printing by Global Governments has lit a match under the bonfire and both charts like primed for the next phase of the bull cycle.
Quantifiable Search interest on Google, Twitter and social media in general has picked up for Bitcoin and Ethereum and I will watch those numbers to gauge public interest.
The one aspect I am unsure about is the level of institutional involvement this time around compared to the 2017 boom where it was largely retail traders, as such the market may be more tame but most signals are looking very positive.
At times like these, it’s impossible to be 100% sure as major breakout points also correspond to major overbought areas and resistance areas. However, I believe the price action has been strong and Bitcoin smashed through both the horizontal $10.5k resistance and the triangle resistance around $9.5k. It did so convincingly reaching $11.4k and closing the day above resistances and on volume. All of these factors increase the likelihood of this being a major breakout:
I believe the most likely scenario is that this is a potential starting point for the push to new all time highs and beyond and we know once Bitcoin gets moving it can move fast.
From a long term perspective, Bitcoin is also breaking out of a major symmetrical triangle which has been forming since 2017 (see chart below) which offers a lot of support for a major move up.
From a short term perspective Bitcoin is looking overbought with the RSI level over 80 (see first chart). From here I would expect Bitcoin to have a significant retrace (it may go up more first) and for the price to throwback to the breakout point around $10.5k which if it does would be a good entry point to buy more Bitcoin.
Ethereum has now increased ~300% since lows in March and we’ve caught most of that move up.
I will not be parting with my Ethereum anytime soon as the scale of what is being built on its blockchain is breath taking. For me, I may trade in and out of alt coins but right now Ether is a clear hold. Its price expansion will be limited by its ability to scale as discussed previously and this can be seen by recent massive increases in cost to make an Ether based transaction.
However, there are numerous recent positive technological developments regarding ETH 2.0 and I still believe given time (within a year?) Ethereum can scale to 1000’s transactions per second throughput capacity.
From a technical analysis perspective ETH is in an uptrend versus Bitcoin and all looking positive:
When the King makes his move, the rest run for the hills…
Bitcoin made its big move and rumbled up from $9k to $11.3k with altcoins retracing rapidly and the liquidity flocked to Bitcoin. This is all part of the cycle and I am not worried about that, in fact it is often a good time to buy the dip when altcoin prices have retraced against BTC.
When BTC moves up significantly alts often tumble vs BTC and when BTC drops significantly, alts often tumble as well. However when BTC is consolidating in an uptrend or rising slowly alts can rocket up and being in position to catch these moves is important.
I have picked up some altcoins over the past couple of days and I like to go shopping for alt coins when the prices of great coins retrace substantially (e.g 40% or more as alts are much more volatile than BTC or ETH).
Once Bitcoin can maintain its bullish momentum then it will ultimately drag the better quality altcoins along with it and you can see spectacular results.
I have expanded my alt coin holdings to include coins I have mentioned in the past few weeks including AMPL, RSR, UMA, AST, ALGO, HBAR, NULS, OGN, XTZ, POLY. Other Defi coins which look interesting include ZRX and BAL.
The chart for ZRX in particular is looking close to being a good time to enter a position particularly if the price dips a bit more from here. Other coins like SNX and AAVE have already increased hugely so I would not look to buy some until they dip substantially from their respective peaks (e.g. 40-60%).
It’s been a very profitable few months and often I would bank some profits, however on this occasion I am still holding most of my positions with the expectation of the next phase in a bullish cycle.
If Bitcoin falls back towards $9k I will re-evaluate. My breakdown is 40% Ethereum, 40% Bitcoin and 20% altcoins. I believe this is a winning balance at this stage in the cycle and I will only look to change these percentages slightly in either direction depending on the course of events. If Bitcoin dips to $10.5k I will likley increase my Bitcoin to 45 / 50%.
Trading Proverb of the Day
“It’s not about being right or wrong… it’s about making big money when you’re right and not losing much when you’re wrong.”