Majors Lead an Altcoin Sell-off. Is it Time to Layer in?
Markets took a hit in the last 48 hours, with Bitcoin leading the sell-off that cascaded into double digit percentage drops across the board. Is this an opportunity to buy or to sell the fear?
Let’s dig in.
SEC Puts Investors at Unnecessary Risk; Rejects VanEck Spot ETF
The SEC published its decision last week denying a proposed rule change that would allow the VanEck Bitcoin Trust to operate, thereby forcing investors to go through futures-based ETFs to gain exposure to Bitcoin. The VanEck Bitcoin ETF would have been a spot-based ETF, which would have tracked Bitcoin directly, mitigating risks for prospective investor unlike the riskier futures-based ETFs.
Check out the full article here!
Litecoin Mean Reverts
Litecoin has reverted to a cluster of moving averages on the daily time-frame, dropping 28% from $302 to $218 since its Nov. 13th local high.
The coin was just 1.55% shy of the technical target breakout from the pennant structure and is clearly in corrective territory at the time of writing. Litecoin is below the 20-daily EMA, but has yet to close a daily candle below this moving average.
Despite flipping the weekly super-trend into a bull-trend, both $267 and $239 failed to hold as support, rendering these levels of little significance on lower time-frames. LTC/USD has a tendency to be highly volatile on both sides of the trade. So far, the daily super-trend has held as support and medium-time-frame levels suggest a relief rally is likely.
On medium time-frames (4-hour), the pivotal price-action around $248 suggests that bears would defend the S/R flip, while bulls would try to reclaim the level.
As such, until $248 is decisively reclaimed, then one must assume medium time-frame chop or ranging at best. Should majors like BTC and ETH nuke further, a temporary dip below $200 would present a good dip-buying opportunity.
The monthly Bitcoin close for November will be telling for whether the crypto bull cycle will lengthen into 2022 or experience a blow-off top by the end of December.
Compound Teeters on the Brink
Meanwhile, the Compound finance ticker has presented another unique buying opportunity within the accumulation range delineated last week.
Breaking and closing below the long-term upwards trend could unlock a cascade of selling pressure, however. But unless Bitcoin transitions into bear market, COMP/USD is simply priming for another alt-season at the range lows. If the trend-line breaks and doesn’t prove to be consequential (below $274), then the market is ranging until proven otherwise. Dips are buying opportunities.
Monero breaks down
Monero hasn’t had its time in the sun, and perhaps never will. Legacy coins tend to perform in clusters yet XMR/USD hasn’t followed, yet.
The next technical daily support for monero rests at $192, unless a reversal rally triggers soon. Should XMR/USD reclaim $265, the original $420 target is back in play for bulls. That said, the original privacy coin remains among the top 50 altcoins on coingecko and is typically a strong contender for capital flows once alt season takes off.
A play on strength above $265 or at $192 support could make sense given the broad-ranging technical picture. As with many altcoins, XMR/USD performance is dependent on Bitcoin.
DYDX breaks down into a range?
DYDX broke down into bearish territory after losing the upwards trending support to increasing sell-side pressure. However, bulls have so far stepped in on the DYDX/USD pair, suggesting a range-bound trading environment.
The coin set a local bottom at $11.4 at the time of writing and is within oversold territory. Unless $15 is decisively reclaimed, the ball is in the bears’ court. On lower time frames, DYDX/USD is probably ranging, with deviations below $13.3 providing a good risk/reward setup for swing longs into overhead resistance.
While the outlook appears somewhat bearish for several altcoins, much depends on what majors do (Bitcoin and ETH). Despite the bearish price-action and sentiment, most coins are bound to witness a relief rally moving forward, at least until the stoch-RSI resets to neutral territory. The reality, which might seem counter-intuitive is to buy when the majority is fearful and to sell when the majority is greedy, and fear is in the air. This is always easier said than done.
Regardless, in a blow-off top scenario medium and high time-frame levels won’t matter for altcoins. In a ranging environment for majors, altcoins tend to rally. My guess is that while lower prices are possible until the end of the month, the correction won’t last too long. All eyes are on the weekly and end of month close.
Catch you later.
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p.s. This is my opinion. It is not financial advice.
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