An oversold Altcoin Market Teeters on the Brink. Here’s the long and short of it.

5 min readJan 27, 2022

In this edition, we discuss some altcoins within the context of a modestly recovering Bitcoin/Dollar situation. The ‘tldr’ of it is that crypto is majorly oversold, and that’s normally a good time to pay attention.

Meanwhile, the US is working on its own central bank digital currency, which the Bank of America has described as ‘inevitable’ in a recent memo.

Let’s dig in.

Bank of America: US Will Release a CBDC by 2030

The Bank of America believes that a USD central bank digital currency (CBDC) is “inevitable”, and that it would take on a massive role in the monetary system by 2030.

If designed incorrectly, a central bank digital currency could be weaponised against users as is the case with the Chinese Communist Party-controlled digital Yuan.

Read the full article here.

Dear readers,

The purpose of this newsletter is to provide context to cryptocurrency markets. This analysis takes time to write-up and it’s released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service. While I cannot promise perfection I do my best to be honest and transparent.

Thank you for reading.

Feel free to contact me with feedback on contact@chrisoncrypto.com.

Technically speaking

ETH Bounces off $2,000

Ethereum/Dollar is is trading around $2,500, up 14% since Monday, while the BTC pair consolidated its retreat below ₿0.07.

The Bitcoin, Ethereum and Litecoin technical pictures against the US Dollar are more or less comparable.

This is to say, that the retreat to $2,000 is a comparable situation to Litecoin’s retreat to sub-$100 and Bitcoin’s $33,000 — each of which is a make-it-or-break-it moment.

Now that the bounce has materialised on lower time-frames, one can expect the nearest overhead resistance $2,700 (not drawn) to be met. If the market gods decide to begin a bottoming process, then a rally to $3,100 could be the first trouble area for bulls.

Considerations for the ETH/BTC pair still apply, which means that further downside in Bitcoin/Dollar would be exacerbated in altcoins, including Ethereum and Litecoin.

In my view, Bitcoin/Dollar is a safer counter-trend play which yields similar returns on bounces given the broader downtrend..

Notably, while the relative strength index (RSI) is in oversold territory on the daily chart, a bullish divergence has yet to materialise for ETH/USD. While not necessary, divergences often offer actionable confluence for tops and bottoms. The monthly super-trend on the ETH/USD pair shows support at $1,850, should the market launch nukeit.exe. again.

Regardless of whether the market drops further from here, these levels are a good place to aggressively accumulate Bitcoin, Ethereum and Litecoin while keeping a longer time horizon in mind. The probability for the market to go full nuclear while Bitcoin is below $100,000 is very low in my view. Also, the fact that we had no blow-off top is a testament to a maturing market and a lengthening cycle. Unless you think it’s all going to zero, now is the time to pay attention.

Litecoin Prints Bullish Divergence

Litecoin is rarely ever in a good spot these days. The market now expects a Litecoin pump to be followed by a swift market-wide dump, which brings into question whether the demand and supply dynamics are even functioning.

In an interview this week, Litecoin founder Charlie Lee admitted that the Litecoin foundation needs to step up its marketing game in light of the vast competition in the crypto market. This would complement its robust network which has all the tech but no shine, and it explains why protocols that are more often offline than online have outperformed LTC so far.

From a technical perspective, Litecoin/Dollar is teetering at macro weekly support, exchanging hands at $109 at the time of writing.

The Bitcoin pair is also beneath the ₿0.03 level, which may even drop further to monthly support at ₿0.026, where one could expect a reaction.

Locally, Litecoin/Dollar is technically set up for a relief rally. The RSI is within oversold territory and has printed a technical bullish divergence, with price trending lower while the RSI remains flat. This indicates declining sell-side momentum.

Regardless, LTC/USD is in a downtrend like its peers, meaning bitcoin weakness would be exacerbated in LTC. Losing the $96 floor price wouldn’t be a pretty sight. The only historical support I can see beyond that is $66-$60, which acted as a pivot throughout 2019 and 2020.

Litecoin is in a do-or-die situation more so than Bitcoin and Ethereum given its unexpected underperformance last year. For a coin with such robust infrastructure and widespread exchange support, upgrades and development plans, it would be a dark day if this long-standing cryptocurrency were to be selected out of the market while projects without any integrity to speak of actually flourished.

The big decision has arrived.

Catch you later.

p.s. This is my opinion. It is not financial advice.

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