The Crypto Comms #31
Is there light at the end of the tunnel? These two charts suggest that there is. It’s not the time to capitulate, but accumulate aggressively.
In this issue:
- Bitcoin analysis
- Litecoin analysis
- Latest happenings
- Listening material
Bitcoin/Dollar is the midst of digesting insolvencies, liquidations and financial contagion from the FTX fallout, which can be traced back all the way to the Luna-Foundation’s collapse in May.
Prices are currently depressed, much the same way that everyone’s hopes and dreams are.
In any case, BTC/USD has found support at around $15,500, but has not managed to break above $17,500. Key liquidity rests at this level, which may spur on a larger relief to around $18,300.
Unless BTC/USD closes a daily candle above $18,300, there is no reason to expect price to traverse back into the $20,000 region, technically. The line in the sand is $15,500, after which a $12,000 BTC is possible.
That said, there are numerous reversal signals that cannot go unnoticed. A positive RSI divergence can be observed on both the weekly and daily time-frames. This rare confluence is indicative of underlying market strength.
Buyers are piling in with conviction. As such, a relief rally above $20,000 should come as no surprise in the days ahead.
Litecoin has started to show relative strength. Since June, the LTC/BTC ratio has increased 190% off the lows.
Considering the fundamental backdrop of 84 million LTC to 21 million BTC, Litecoin’s market cap ($5.5bn) is currently off by $73 billion. This is the macro consideration that would place LTC back in the top 3 cryptocurrencies where it belongs.
One probable explanation for Litecoin’s relative strength is that it is not held on crypto company balance sheets to the same degree as Bitcoin. When sellers are forced to liquidate their holdings to service debts, Bitcoin tends to be a major company asset. Selling coins in bulk on the open market likely played a part in this divergent behaviour.
Besides capital flow considerations, Litecoin also carries the same legitimacy and track-record as Bitcoin (with less contagion risk). This appeals to investors.
From a technical standpoint, Litecoin did not revisit its June lows and has surpassed both September and June highs. Notably, LTC/USD has printed a negative RSI divergence on the daily timeframe, which could be offset by a positive divergence on the weekly timeframe.
Regardless, LTC/USD strength tends to be a leading indicator for BTC/USD. Will history repeat itself?
Only time will tell.
Originally published on Revue (28/11/2022)
- Bitfinex Unveils Freedom Manifesto at Adopting Bitcoin Conference in El Salvador.
- Clear Case of Fraud? FTX Day One Bankruptcy Filing: ‘Complete Failure of Corporate Controls’.
- KPMG Report: CEOs Cut Back or Pause ESG efforts as Backlash Deepens.
- Massive Spike in Bitcoin Accumulation From Retail Investors Following FTX Scandal.
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Tuesday. 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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