Ethereum, Litecoin & Compound Experience A Relief Rally. Will it last?

5 min readFeb 2, 2022

In this edition, we discuss several altcoins as a relief rally unfolds across the board. Specifically, we look at ETH/USD, LTC/USD and COMP/USD levels of interest in what could be the onset of a macro bottoming formation.

Meanwhile, Fidelity Digital Assets released a report this week stating that bitcoin is a ‘superior form of money’, opening up discussions often conveyed by advocates of the Nakamoto standard.

Finally, crypto currently lacks a compelling narrative. What could fill the void?

Let’s dig in.

The Nakamoto Standard: Fidelity says Bitcoin is a ‘superior form of money’

Multinational brokerage giant, Fidelity Digital Assets, released a report on Bitcoin titled Bitcoin First, naming the digital asset a ‘superior form of money’.

Litecoin which has a 100% uptime history and over a decade’s worth of provable decentralisation, provable scarcity, seamless integration in the crypto financial sector, and a newly released update (MWEB), didn’t make the cut, however.

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 Approaches Resistance

Ethereum/Dollar is approaching the $3,000 pocket of resistance.

This is arguably the most consequential pivot for the pair. If rejected, a retest of $2,400 should be given due consideration.

Until ETH/USD reaches $3,300, price-action is largely considered within the context of a ‘bearish retest’. If Bitcoin/Dollar has a ‘v-shaped’ recovery, the odds of ETH/USD taking out this resistance zone on the first attempt increase .

The Relative Strength Index has technically broken the downward trend, but unless a swift move up follows, it’s a bearish divergence (i.e. lower highs in price coupled with higher highs on the RSI).

Bottom structures come in all shapes and sizes — my favourite being the double bottom with a bullish divergence. The double bottom rules.

Litecoin Attempts a bounce

Litecoin/Dollar is attempting to bounce off $100 mark.

The pair found buyers and is in the process of forming a bottom, provided Bitcoin/Dollar doesn’t disintegrate overnight.

At the time of writing, the next pocket of resistance for LTC/USD is the H4 200-ema $127 and the daily super-trend resistance at $135.

Zooming out, LTC found support at the 200-weekly weekly EMA ($111), which has some historical significance.

Additional confluence is found in a 7-year trendline (since 2015) as well as the psychological significance of round numbers.

Taking the currency’s halving cycle and diminishing supply into consideration, a $100 Litecoin is — by historical standards — as cheap as it gets.

Compound Bounces on Monthly Support

Meanwhile, buyers returned to the Compound/Dollar pair at monthly support, opening up the possibility for a bottoming process.

The lending protocol fully retreated to Nov. 2020 lows where, as you may recall, I had suggested buying.

Barring some external debilitating force like more regulatory scrutiny, COMP/USD could find a steady stream of buyers at these prices as it attempts to develop a macro trading range above monthly support.

As such, range-bound trading logic applies i.e. — buy the bottom and take profit on the way to range highs.

The Financial Privacy Narrative

All in all, it can’t be understated that altcoins are riskier plays to btc, and with retail focused on colourful jpegs and NFTs, it’s arguable that this bubble must burst first before DeFi becomes all the rage again — especially if there’s limited money coming into the space. After all, if BTC is treated as a risky tech play by traditional investors — which is complete tunnel vision in my view — then altcoins are the same play on leverage (in their mind).

Finally, the market is currently lacking a fresh and compelling narrative, with the exception of privacy-centric coins like Litecoin and Monero, both of which grow more attractive in light of the CCP’s roll out of the surveillance-state digital yuan. Western Central Bankers also find the prospect of controlling every acute detail of people’s lives compelling too, which has to be worrying even to the most servile investors (or should I say investooooors).

The desire for more privacy is becoming apparent in people’s general migration from social media platforms to messaging applications. The same is likely to become true of money, and Litecoin’s MWEB is positioning itself to take full advantage of this situation. Monero would benefit too as will the plethora of coins suddenly becoming “so private even you don’t know how much money you have” overnight.

I can’t say I know when this narrative will be all the rage, only that it very likely will be.

Catch you later.

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

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