The cryptocurrency market finally decided to break out of its 3-month consolidation range, with Bitcoin (BTC) back above $47,000 and the total cryptocurrency market cap back above the $2 trillion mark for the first time since mid-February.
If you read last week’s CrypoPulse Weekly Report you’ll remember that we discussed Bitcoin’s historical macro market cycles, as well as the components of each cycle (5 phases). We are happy to announce that as of Monday morning, it appears that our theory on a shortened version of the typical 4-year BTC cycle has completed and is potentially ready for a new Bull Market.
After the selloff that began in November, BTC remained range bound between $33,000 and $45,500. It appears that we are now at the end of a re-accumulation phase and the beginning of a new Bull phase after taking out the $45,500 resistance level.
Now, we’re watching Bitcoin to determine whether it will consolidate more at higher levels, or if it is already full-speed ahead. We’re watching the $50,000 level as psychological resistance to beat, but want to see BTC close and confirm above $50,800 to really support the potential for another move up. If the $50,800 level is defeated, the next crucial resistance level should be near the October/November 2021 trading range low around $53,000.
We know by now that if Bitcoin moves, the rest of the cryptocurrency market will move in the same direction. However, that does not mean that there is 1 singular trend within cryptocurrencies. Using the ETH/BTC pair to measure the relative performance of altcoins against Bitcoin, we can see that we’re at a bit of a crucial point for Bitcoin vs. Altcoin battle:
ETH/BTC is consolidating smack dab in the middle of the 50-day and 200-day moving averages. When there is a breakout/breakdown from this tight range, a move above the 200-day moving average would scream that ETH/altcoins will outperform BTC, and a break below the 50-day moving average would signal BTC preparing to outperform altcoins.
As both Ethereum and Bitcoin are bumping into overhead resistance at their respective 200-day moving averages, the ETH/BTC ratio should be your best indication as to which one will move more.
If you take a deep dive into the charts, you’ll see that most large-cap altcoins have similar long-term trends to BTC with the exception of a few outliers. We’ve continually watched Solana (SOL) and Terra (LUNA) even as global equity markets have been pummeled over the past few months.
Both Solana and Terra/Luna are directly involved in the DeFi space, and have slightly different long-term goals.
Solana (SOL) is touted as a faster and cheaper version of Ethereum due to the similarity in Web3 services that are available between the two cryptocurrencies. From a technical standpoint, SOL is one of the only large cap coins that still hasn’t broken out above the negative trend established in November 2021.
While BTC and ETH were making gradually higher highs and higher lows within the past 3 months of consolidation, SOL continually made lower lows until finally breaking out. Due to Solana’s growing popularity as a mainstream cryptocurrency as well as its large-cap status, we’re expecting a breakout above this trend and a test of resistance at the 200-day moving average.
Terra (LUNA) has been in headlines recently for their ongoing acquisition of $10 billion worth of BTC in order to back their UST stablecoin. This news has obviously helped Bitcoin’s price (the purchase equates to nearly 3x the gross investment from institutional firm Microstrategy), but should also show crypto traders that LUNA is still building and expecting to grow by leaps and bounds in the future.
The chart for LUNA essentially speaks for itself. Currently sitting around $100, LUNA should break through its $104 all-time high any day thanks to a nice wedge forming to the upside.
LUNA moved before the rest of the market and is completing a perfect cup and handle pattern that would potentially force a move to as high as the $150 area.
If you’re trading along with the CryptoPulse Quant then you would have already been in LUNA (WLUNA on Coinbase) since it bottomed out in late-February, and we’re hoping to hit an 80% profit target on that position very soon!
**If we discussed a cryptocurrency that you would like to trade but isn’t offered on your current crypto exchange, please see coinmarketcap.com in order to view a profile on any tradable cryptocurrency, as well as a list of exchanges that do offer the coin for trading.**
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