Bitcoin (BTC) vs. All Other Coins. Macro Trend Analysis
Updated
CEXIO:BTCUSD has slow transaction times, expensive fees, and limited functionality compared to many altcoins. I must admit, however, that CEXIO:BTCUSD largely dictates the market behavior of nearly every other coin. If you're like me, you've seen your altcoins bleed out to CEXIO:BTCUSD as it is making its latest bull run. But why is this? In this longer analysis/discussion post, I'll explain my thoughts on this subject and discuss how to profit off of CEXIO:BTCUSD in the short-term, and altcoins in the long-term.
The last BTC bull run (July 2017 - December 2017)
While other coins did do well during this period, we all saw the influx of new capital into the crypto market. CEXIO:BTCUSD ran up nearly 5x during this time and FOMO overtook novice investors looking to get in on the gains. I'd argue that much of the new money knew very little about the crypto space, and even fewer actually understood the technology behind CEXIO:BTCUSD and altcoins.
BTC flattens out (December 2017 - mid-January 2018
The slight recovery for 20k down to 17k was much needed and did not signal the beginning of the pullback that we saw starting a month ago. In that time, I made a killing in mid-cap and small-cap coins that were underpriced compared to CEXIO:BTCUSD. The behavior that we saw here was not the new novice investors, but largely smart money moving in to capitalize on altcoins. During this time, we still saw new money pouring into the crypto space. With CEXIO:BTCUSD holding relatively stable, it seemed that the inflow of money into CEXIO:BTCUSD balanced the flow of money from CEXIO:BTCUSD to altcoins. At this point, we saw whales and smart money take profits and begin the descending channel.
BTC crashes (mid-January 2018 - early February)
Weak hands, weak hands, weak hands. This correction was absolutely needed, as the growth that we saw in CEXIO:BTCUSD with the influx of new money was not sustainable. Talk to any novice that got in at 15k+, and they'd tell you that the price of CEXIO:BTCUSD was cheap compared to its 50k/100k targets that they saw. These targets were not realistic in the short-term, but may be in the long-term. And as they saw their investment value fall and retrace up to 70%, they decided to cut their losses and pull out. For the new investor, losing that much money that quickly is a difficult thing to deal with. But if you buy into an overpriced market, what else do you expect?
BTC is oversold and now recovering (early February - today)
With the frenzied selling over, we saw smart money transfer that took profits early buy back in after the crash. However, the difference that we see here is that there isn't new money, or at least not as much, pouring into the market. Where does this money come from? ALTS! We're seeing nearly every altcoin lose ground to CEXIO:BTCUSD as investors try and ride the recovery up.
... To be continued in the next comment ...
The last BTC bull run (July 2017 - December 2017)
While other coins did do well during this period, we all saw the influx of new capital into the crypto market. CEXIO:BTCUSD ran up nearly 5x during this time and FOMO overtook novice investors looking to get in on the gains. I'd argue that much of the new money knew very little about the crypto space, and even fewer actually understood the technology behind CEXIO:BTCUSD and altcoins.
BTC flattens out (December 2017 - mid-January 2018
The slight recovery for 20k down to 17k was much needed and did not signal the beginning of the pullback that we saw starting a month ago. In that time, I made a killing in mid-cap and small-cap coins that were underpriced compared to CEXIO:BTCUSD. The behavior that we saw here was not the new novice investors, but largely smart money moving in to capitalize on altcoins. During this time, we still saw new money pouring into the crypto space. With CEXIO:BTCUSD holding relatively stable, it seemed that the inflow of money into CEXIO:BTCUSD balanced the flow of money from CEXIO:BTCUSD to altcoins. At this point, we saw whales and smart money take profits and begin the descending channel.
BTC crashes (mid-January 2018 - early February)
Weak hands, weak hands, weak hands. This correction was absolutely needed, as the growth that we saw in CEXIO:BTCUSD with the influx of new money was not sustainable. Talk to any novice that got in at 15k+, and they'd tell you that the price of CEXIO:BTCUSD was cheap compared to its 50k/100k targets that they saw. These targets were not realistic in the short-term, but may be in the long-term. And as they saw their investment value fall and retrace up to 70%, they decided to cut their losses and pull out. For the new investor, losing that much money that quickly is a difficult thing to deal with. But if you buy into an overpriced market, what else do you expect?
BTC is oversold and now recovering (early February - today)
With the frenzied selling over, we saw smart money transfer that took profits early buy back in after the crash. However, the difference that we see here is that there isn't new money, or at least not as much, pouring into the market. Where does this money come from? ALTS! We're seeing nearly every altcoin lose ground to CEXIO:BTCUSD as investors try and ride the recovery up.
... To be continued in the next comment ...
Note
Altcoins vs BTC in the future"Number one rule of Wall Street. Nobody... and I don't care if you're Warren Buffet or if you're Jimmy Buffet. Nobody knows if a stock is gonna go up, down, sideways or in fucking circles. Least of all, stockbrokers, right?"
- Mark Hanna (Matthew McConaughey, The Wolf of Wall Street)
If you think this part is incorrect, call it out in the comments. The trend that I see is that an upward CEXIO:BTCUSD market with no new money coming in must mean that altcoins lose ground. That's the only place that capital can come from! Until we see either (1) CEXIO:BTCUSD level off or (2) see a new frenzy of new money coming into the market, we will continue to see altcoins bleed.
How to profit?
My strategy is to pull my investment from every coin that I don't think is already undervalued. Until I see a trend reversal on coins, I'll hold in CEXIO:BTCUSD. If we see CEXIO:BTCUSD go down with altcoins going down, I'll pull into fiat. When we see CEXIO:BTCUSD level off and altcoins begin to flatten and eventually move upwards, I'm going to put money into strong coins. This is a cycle, and I don't see CEXIO:BTCUSD as overvalued ... yet.
Short-term BTC analysis
In order for CEXIO:BTCUSD to maintain its upward channel, we need to break through 12k with strong RSI and volume. Expect a challenge here and stay focused on signs for reversal. For now, the price is below the long-term MA and it looks like we're going to break through. Stay tuned for updates as I watch this market closely.
I'd like to hear your thoughts on BTC vs. altcoins! Please comment below, as the more input we see, the more informed we are!
*** This is not a recommendation to buy or sell, this is for educational purposes only! ***
Note
We saw heavy resistance at the upper line as predicted. RSI is showing slightly oversold, but exiting this channel will not be good for the BTC rally. We're about to cross below the longer-term MA and exiting the bottom edge of the flatter channel will indicate a further drop in price.Note
I'll be watching this closely tonight, but I am seeing a drop below the long-term moving average and a break below our channel. I'm currently out of BTC and into USDT, but RSI is showing that it is approaching oversold at a steep angle.Note
Shorter-term look here. I'm still holding out from buying BTC until I'm confident one way or the other. Looks like we're within the upper channelNote
See the channel that I'm tracking with. This is a big point where BTC must decide which direction it's going.Note
Much longer-term, here's the issue that I see with BTC. The last two times that we've seen the RSI go overbought have lead to declines in prices. We've failed to break the resistance at 12k and are showing overbought on this chart. We could still be within the upward channel, but I do find it odd that BTC went from bearish to bullish with no retrace. I'll still be looking for short-term indicators to see where we're headed, as I'm skeptical that this bump isn't just attributed to the money moving out of alts and in to BTC. I don't know of anyone that's newly investing in BTC since the crash, meaning there is no new money to push BTC up. I'm holding in fiat until I can be certain that this isn't another retrace. Losing out on short-term profits by mitigating long-term risk is what I'm looking at here.Note
Short-term look, it seems like BTC is consolidating for another chance at breaking resistance here. We're bouncing around the middle of the RSI and the price is flattening out. In the long-term, the RSI went from overbought to right in the middle. Note
Tracking this recent drop, we see a downward-trending channel formed. I'm waiting to see what happens here.Note
Very short-term (5 minutes) this is showing oversold. We may see a buy opportunity coming up.Note
I'm seeing a head and shoulder pattern forming here.Note
Very short-term here. I'm back in at 10,900 and am using the upward channel as support.Note
Closing out this idea now, stay tuned for my next stuff!
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