The Crypto Comms #21

Bitcoin is dead. Long live Bitcoin.

As we enter the late-stage accumulation phase for crypto-markets, the balance of power between the top two cryptos is shifting. But what’s happening under the surface?

Let’s dig in.

In this issue:

  1. The reversal
  2. Ethereum leads
  3. Latest happenings
  4. Listening material

Technically speaking

Crypto market analysis

ETH/USD levels of interest

The technicals

Technically, Ethereum must maintain low-time-frame strength above $1,640 in order for the bullish break-out case to hold water. If price reverses after tagging $1,720 liquidity, that’s a red-flag in the immediate short term.

Meanwhile, Bitcoin/Dollar is in a perpetual state of consolidation which seemingly has no end to it. Prices remain depressed but low-time-frame flows (OBV) indicate that this drawn-out consolidation is at its end.

Something has to give.

The pivot

If BTC/USD resumes its mean-reversal trajectory towards $30,000 this September, the bear market will officially be over, and Bitcoin will have transitioned into a medium-term accumulation range at worst. At best, the macro-economic situation turns dramatically and the path would be clear for BTC to act as a smoke-alarm yet again.

The highly anticipated Powell pivot will eventually happen and bring with it the end of this bear market; the question is how bad does the real economy have to get before central bankers are forced to act? Will the US drop the Dollar index (DXY) to help its Eurozone allies, or will it recuse itself from Western Europe and leave it in the open arms of the Chinese and Russians?

Regardless, Bitcoin is on the precipice of a major move. The Bitcoin Historical Volatility index (BVOL) has dropped below 20, which tends to precede a period of high volatility.

The draw on liquidity remains to the upside in my view, not least because of the inefficient drawdown witnessed in late August.

Ethereum leads

But the situation is more nuanced than that. Ethereum/Dollar is leading the recovery and ETH/BTC is about to exit the range it’s been in since May 2021. With the merge hype in full swing, Bitcoin could be unwillingly dragged higher because of ETH strength.

Assuming ETH/USD strength continues (and why wouldn’t it; Vitalik et al. need to be able to claim success after all), then the answer could be very straightforward. Either Bitcoin tags along, or the top two cryptos significantly diverge from each other. For obvious reasons, this would be a major PR problem for the loser, which is why it’s not going to happen (in all probability).

Currently, Ethereum ($200 bn) need only double in dollar terms to overtake Bitcoin ($381 bn) by market cap. Given the potential significance of such an event, I suspect Bitcoin whales will do everything in their power to stop that from happening — so if they’re unable to nuke the entire market (and in doing so bring more people on BTC’s side), then the only option is to pump it to the heavens to maintain a healthy ETH/BTC ratio.

This would translate into a market-wide rally as the top cryptos compete for the number 1 position.

In any case, the game is set and the pieces are moving. The crypto market is in its late-stage accumulation phase, after which a new bull market will begin.


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Latest happenings

Listening material

Dear readers,

The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.

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Journalist-turned crypto-writer & analyst; forging the narrative, stacking sats.

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Chris on Crypto

Journalist-turned crypto-writer & analyst; forging the narrative, stacking sats.