Navigating the Crypto Rollercoaster: Has Bitcoin Soared Too High, Too Fast, and What's Next for Alts?
Stocks are off to a slow start this month remaining mostly flat since November 20. Crypto on the other hand continues to defy expectations. On Monday in our weekly market outlook I went over why stocks could get off to a slow start this month but finish strong. There’s not much new to say on that front other than the plan remains the same, this is not a market to be shorting, dips will be short and shallow and the end of the month will be huge.
The main thing I want to cover this morning is crypto. Has it gone too high too fast? When will bitcoin slow down and when will alts catch up? All good questions given the strength of this bitcoin rally.
I want to preface this by saying that trying to call tops in this market is a dangerous game. As I have said for weeks, we are in a very strong uptrend that should be respected unless it tells us otherwise. However, I do find it interesting given the intensity of this rally that we are making this current high right in between the blue vertical lines which I have had marked as a significant time period.
While this zone has marked some inflection points in past cycles I cannot find much evidence of it being a major top on shorter time periods. The only thing thing that concerns me is the monthly chart which aligns nicely with several major highs and lows pertaining to our Gann rules of 30,60,90 months etc which would suggest we may be making a big inflection point here on the month.
I also believed 42k would show more resistance than it has here so I would not be surprised if we do see a 2015 style setup which was also the first bullish year of the 15-17’ bull market and has had very similar price action to our current year. It was also the year before an election year. This brings me to one final point here when trying to call tops. I am not so concerned about the price as I am about the time. Price can go to 100k tomorrow and it wouldn’t matter so much as long as time tells us whether the move is done or not done thats what I care about.
Above is the same time period in 2015. You can see we had an early December run up that topped on the 15. Dropped into the 26 before going sideways and having one last pop in early January before an even bigger decline. A scenario like this could make a lot of sense if the ETF is announced in Jan 7-10 time window. The main question is what will happen up to then? We will have to see but if we do put in a high over the next few days this is what we will be watching for.
The next big question is alts. Do we get an alt season or is Bitcoin dominance too strong? Alts have really been lagging the market and especially major one like AVAX, ETH, BNB, ADA, etc
This is the weekly BTC.D chart. It has definitely broken out of a major level but it is going to run into an even bigger level at the next blue line around 56.25% this will be the line in the sand. Its also only a few weeks away from being 72 weeks off the lows. Which would also coincide with bitcoin topping on an ETF approval in January.
As for alts, below we have total 3 which is the total crypto market cap excluding BTC and ETH
This is seriously trailing the market right now and I do believe it will play some catchup. The arrow I have would be quite a violent move up for alts but it would put it in line with the move we have seen on bitcoin. If this move is to play out revisit the 2015-2016 chart. We may see a major top on btc.d after the ETF approval in early January that gives the green light for alts to have a huge Q1 next year. A run like this could last from mid January to March/April.
Right now we have to have patience and watch how Bitcoin plays out. It is certainly sucking liquidity and attention away from alts and may continue to do so until the ETF is approved. I do believe this will be a sell the news event on BTC. People will immediately turn their attention to whats next which will be the ETH etf rumors. This will allow ETH and other alts to get the spotlight in the first quarter of 2024. As it stands right now we may still be a month or so out from a true repricing of alts given such a strong btc price and narrative.