Is The Bear Market Over? Or Will We Need More Patience?
Updated
This is a follow up written post to my recent video analysis of the cryptocurrency market, which focused on three prominent altcoins (ETH, XRP, and XLM).
As you can see, we broke the major downtrend of the entire bear market on MASSIVE VOLUME. This is a very bullish sign, and it means that selling momentum has really slowed down. It also means we may have seen a reversal. I had been calling for a reversal since January, believe it or not. Just see my post history.
However, there are some very concerning things going on. Notably, volume has completely evaporated, showing little to no demand at current price levels for most coins, including Bitcoin. Next, even though their USD charts still look relatively good, ETH, XRP, and XLM have all continued to drift lower on their Bitcoin ratios. This is happening on somewhat low volume, which has the characteristics of a terminal shakeout (meaning it's actually a fake move). If this were to be a fake move though, we should have seen bounces already. XLM should have bounced harder at the 2200 zone, and XRP should have bounced harder at 6300. This leads me to believe that a major breakdown on these ratios is possible. Additionally, the Ethereum bottoming fractal I've been looking at for a while seems like it won't be playing out how I'd hoped. I did mention this as a possibility.
We are currently in a no trade zone, but the setups to trade are as follows:
If these coins start to break down, SELL (perhaps with a stop buy a bit above support, in case it rebounds quickly). Then WAIT until a bounce starts to occur. This would essentially be trying to time the next bottom, which could be very difficult. I don't think I'll personally be trading this.
OR, if XLM, XRP, ETH, etc. start to bounce now, wait to make sure that these bounces are SUSTAINED, and then enter a long term position.
I see essentially three possibilities (shown in pink, green, and yellow), all of which would have obvious technical reasons for occurring:
1 (pink): We bounce near current levels, proving this to be a slow shakeout before the next leg up in the market. This was what I was hoping would happen, but it's seeming increasingly unlikely that this will happen. This would have been the healthier route for a market reversal. It would be in line with what happened after the dotcom bubble burst, since the crypto market made a similar decline.
2(green): We drop heavily to a lower low, but not for long. This low would test the broken resistance as support. This would be a V-bottom or capitulation event, and would be the best buying opportunity so far. If a V-bottom doesn't occur, perhaps we just move sideways and make a new bottom.
3(yellow): This is the worst case scenario. This also has us testing the downtrend as support, but much further along in time. It would also allow us to meet a very long uptrend line. This wouldn't make too much sense, since I think Bitcoin will start to increase massively soon due to the halvening (sort of like Litecoin). Except...this could happen in the event that Bitcoin completely takes over again and most altcoins die out, since this chart excludes Bitcoin.
One of the reasons for concern is the inability of certain coins like ENG and NEO to sustain new uptrends, despite bullish market sentiment. Check out these charts:
ENG fails to hold above its previously broken uptrend (light blue):
NEO fails to hold the uptrend against Bitcoin it held since December:
The failures of these coins could also just indicate that long term investors or preferring other projects for the time being. But even ETH and XRP (#2 and #3 aren't looking good against Bitcoin, so it seems to me that something else is at play).
In terms of Bitcoin, it could mean that we're actually at the pink circle...or even yellow...but that would be very drastic. Ideally, I'd like to be at the green or orange circles (when comparing with the last bear market): The orange actually looks the most similar, in terms of volume. Additionally, LTC has clearly reversed, and though I expect it to possibly retest $40-50 after its run to near $100 (predicted this very early, by the way), which I thought would bring the other alts up. I was wrong though. Here are the circled tops on the Bitcoin chart from the last bear market:
Here is a Litecoin chart comparison:
2015 Reversal
2019 Reversal with possible retest of $40-50
I do hope that the bear market is near to ending, but these are all the signs I'm seeing that we could be in for a little bit more pain first. Time will tell. This is not financial advice, and I'm not a professional! Good luck out there.
-Victor Cobra
As you can see, we broke the major downtrend of the entire bear market on MASSIVE VOLUME. This is a very bullish sign, and it means that selling momentum has really slowed down. It also means we may have seen a reversal. I had been calling for a reversal since January, believe it or not. Just see my post history.
However, there are some very concerning things going on. Notably, volume has completely evaporated, showing little to no demand at current price levels for most coins, including Bitcoin. Next, even though their USD charts still look relatively good, ETH, XRP, and XLM have all continued to drift lower on their Bitcoin ratios. This is happening on somewhat low volume, which has the characteristics of a terminal shakeout (meaning it's actually a fake move). If this were to be a fake move though, we should have seen bounces already. XLM should have bounced harder at the 2200 zone, and XRP should have bounced harder at 6300. This leads me to believe that a major breakdown on these ratios is possible. Additionally, the Ethereum bottoming fractal I've been looking at for a while seems like it won't be playing out how I'd hoped. I did mention this as a possibility.
We are currently in a no trade zone, but the setups to trade are as follows:
If these coins start to break down, SELL (perhaps with a stop buy a bit above support, in case it rebounds quickly). Then WAIT until a bounce starts to occur. This would essentially be trying to time the next bottom, which could be very difficult. I don't think I'll personally be trading this.
OR, if XLM, XRP, ETH, etc. start to bounce now, wait to make sure that these bounces are SUSTAINED, and then enter a long term position.
I see essentially three possibilities (shown in pink, green, and yellow), all of which would have obvious technical reasons for occurring:
1 (pink): We bounce near current levels, proving this to be a slow shakeout before the next leg up in the market. This was what I was hoping would happen, but it's seeming increasingly unlikely that this will happen. This would have been the healthier route for a market reversal. It would be in line with what happened after the dotcom bubble burst, since the crypto market made a similar decline.
2(green): We drop heavily to a lower low, but not for long. This low would test the broken resistance as support. This would be a V-bottom or capitulation event, and would be the best buying opportunity so far. If a V-bottom doesn't occur, perhaps we just move sideways and make a new bottom.
3(yellow): This is the worst case scenario. This also has us testing the downtrend as support, but much further along in time. It would also allow us to meet a very long uptrend line. This wouldn't make too much sense, since I think Bitcoin will start to increase massively soon due to the halvening (sort of like Litecoin). Except...this could happen in the event that Bitcoin completely takes over again and most altcoins die out, since this chart excludes Bitcoin.
One of the reasons for concern is the inability of certain coins like ENG and NEO to sustain new uptrends, despite bullish market sentiment. Check out these charts:
ENG fails to hold above its previously broken uptrend (light blue):
NEO fails to hold the uptrend against Bitcoin it held since December:
The failures of these coins could also just indicate that long term investors or preferring other projects for the time being. But even ETH and XRP (#2 and #3 aren't looking good against Bitcoin, so it seems to me that something else is at play).
In terms of Bitcoin, it could mean that we're actually at the pink circle...or even yellow...but that would be very drastic. Ideally, I'd like to be at the green or orange circles (when comparing with the last bear market): The orange actually looks the most similar, in terms of volume. Additionally, LTC has clearly reversed, and though I expect it to possibly retest $40-50 after its run to near $100 (predicted this very early, by the way), which I thought would bring the other alts up. I was wrong though. Here are the circled tops on the Bitcoin chart from the last bear market:
Here is a Litecoin chart comparison:
2015 Reversal
2019 Reversal with possible retest of $40-50
I do hope that the bear market is near to ending, but these are all the signs I'm seeing that we could be in for a little bit more pain first. Time will tell. This is not financial advice, and I'm not a professional! Good luck out there.
-Victor Cobra
Note
Posted this on my video analysis, but this is the psychology behind capitulation, and why it could happen soon:1. The market looks like it's reversing! Finally! We made it guys!!
2. But wait....why are my small cap coins crashing? Will they survive the bear market?? Better put my money in safer altcoins or Bitcoin .
3. Damn, my "safe" alts aren't doing anything. Maybe that wasn't the bottom after all! Better put all my money into Bitcoin , in case it takes over.
4. Why isn't Bitcoin going up either?? Wait...it's dropping...the whole market is dropping! Better sell everything! (Capitulation)
Note
These moments of greatest fear can often be great buying opportunities. Hopefully we get some buying soon. Otherwise, a drop as I've outlined may end up playing out.Note
In order for the market to remain bullish, I'd like to see alts rally as Bitcoin goes sideways/consolidates. This would be in line with typical crypto market behavior. If this does not happen, my worries may be realized.Note
Currently, the market seems to be testing whether or not alts can hold current USD price levels (despite lagging Bitcoin ratios). If alts like NEO can find buyers at $11, and stay within the 2100-2300 area on its Bitcoin ratio, it still would be a good sign. If alts start to break down in USD value, as mentioned above, things could get ugly. We want buyers to continue supporting current prices.
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