Are We About To See An Altseason? Market Review 24th November
Hi and welcome to this Cryptocurrency
altseason market Analysis. Today we will take a look at the overall market situation from Bitcoin to the whole altcoin ecosystem.
There is no doubt we are in a bullrun, also associated with a state of euphoria, so please remain cautious as you take a position in the market.
Bitcoin Analysis: New ATH incoming?
As I am writing this article, Bitcoin is priced at $19,140, its highest price of the current run.
People tend to agree that the final resistance is around $20,000, the ATH (All-Time High) from December 2017. Indeed, yes, it is a resistance, but for me, it is more psychological than technical. This level has only be visited once and does not even have a tiny percentage of the current volume.
That being said, if we take a look at the chart above, we can see the recent run of Bitcoin. Starting from a bit below $10,000, it reached $19,150 today for almost +100% profits in just 2 months, shaping a parabola on the Japanese candlestick chart.
But are we at the beginning of a new cycle, like the crazy 2017 run, or are we close to an end?
I recently discovered a new website gathering all the tools I need to do a perfect Market Sentiment Analysis. Bybt.com gathers all the information you need: Open Interest, Funding Rates, Long/Short ratio.
Watching the Open Interest on BTC Futures today, we can see exponential growth, exactly like BTC Price. Nothing seems to indicate a top here, but we know that we have to be EXTREMELY careful when Open Interest reaches ATH.
The funding rate can be an incredible indicator when it comes to analyzing BTC. The funding rate is a fee aiming to arbitrate price on Futures to price from Spot Markets. A positive funding rate means Longs are paying Short positions due to a too high spread between the different markets.
A positive Funding Rate is telling us that we are currently seeing the Futures market pushing the price up, so the buying pressure is not really “genuine,” if you know what I mean.
The funding Rate can be ignored when below 0.1%. However, when it starts reaching levels like 0.2 to 0.3% and higher, you must worry. Indeed, it makes you want to switch to a low leveraged short position and earn that % every 8hours. Imagine shorting with a x1 leverage (so just staying in fiat) and earning 0.3 x 3 = 0.9% every day! It’s crazy!
We have been seeing the Funding Rate increasing a lot the past few days, especially on Bybit, and it pressured the market down for a few moments, especially before the funding cooldowns.
Long vs. Short Ratio
What you need to know about the Long vs Short ratio, it is that, at a certain point of euphoria, nobody wants to be positioned in a short position. You are considered as a kamikaze by the market. Shorts are missing and the price naturally moonshots without any selling pressure.
Analyzing Long vs Short ratio can tell you a lot about the Market Sentiment. Here, we can see the ratio being only at 0.91. It’s clearly nothing, and indicates more short positions than longs. Why would be a top sitting where longs are outnumbered by short positions?
Fear and Greed Index
In my opinion, the Fear and Greed Index is just like the RSI (on the sentiment point of view). Extreme Greed shows the same overbought conditions, but it doesn’t mean it will go down, the acceleration of the move up is just stronger and can decrease.
Being in the Extreme Greed position means you must remain cautious while the market is still going up. Stop-Losses are a must!
I will never be less insistent on this subject. What we see on Bitcoin is absolutely crazy, and everyone invested must be happy and enjoying the profits…
It would help if you remained extremely cautious. Investing at those levels means being exposed to big retrace, so you must stay vigilant and keep a Stop-Loss in place to minimize the risk.
Altcoins will moon. But When?
I know most of our readers are interested in altcoins. It might rise questions from the newcomers why investing in altcoins when Bitcoin moons and these are struggling to catch up.
Altcoins overperform BTC during altseason, much more than you can imagine if you did not go through one yet. Those returns can be a life-changer, and guessing where the altseason is and perfectly ride it, is a sport only a few many of us can enjoy.
There are 3 ways of detecting altseasons: Bitcoin Dominance Chart, Altcoin Marketcap Chart and Similarities of market conditions
Bitcoin Dominance chart means a lot to analyze the altcoin situation while comparing with BTC price.
Bitcoin Dominance going up means altcoins having a less important share of the cake, and thus, underperforming BTC. It often happens while Bitcoin is having big volatility (like the past few weeks).
The Bitcoin Dominance chart can be analyzed, and thus, we can expect how the market will react. If the chart is bearish, you must have higher exposure in altcoins and vice-versa.
Here we can notice a resistance trendline pushing the BTC Dominance down. This is altcoin-bulls hope. On the other hand, we have 2 noticeable horizontal support levels.
To resume the situation, breaking down those support has a high probability of giving us an altseason. On the other hand, breaking that resistance trendline is bearish for the altcoins.
If you want to learn how technical analysis works, we recommend you to follow this guide.
The only disadvantage of charting Bitcoin Dominance is the impact of Ethereum on it. ETH represents a significant percentage of the market, behind Bitcoin. Thus, ETH’s big volatility can add some noise to the chart and not be relevant to the total market behavior.
Altcoin Marketcap Chart
On the same not than the Bitcoin Dominance, the Altcoin Marketcap chart shows the performance of the altcoins, but decoupled from BTC. It gives you a clear vision of where the market stands in terms of overbought/oversold conditions and past resistances.
On this chart, you can see the first level of resistance has been broken in August, and will act as a support if we come back to those levels.
On the other hand, we can notice a resistance zone towards 50B. I would be cautious with my altcoins investments once we approach this zone.
This advice will stand only because of my past experience and does not rely on any indicators. Please use it carefully.
In the cryptocurrency market, the money is flowing from cryptocurrencies to some others. As you may already know, Bitcoin is the king. As Bitcoin is living through its best performance of the past 3 years, betting against it is crazy unless you have irreproachable risk management.
If you went through past altseasons, especially the 2017 one, you must know that the biggest one has been following a Bitcoin Bullrun. When BTC goes crazy, most of the altcoins do not catch up and stay behind. However, when it stops and ranges, the money starts flowing into altcoins and follow a particular scheme:
Bitcoin ▶ Big cap coins ▶ Midcap coins ▶ Shitcoins
I really hope I did not lose you there. If you read these lines, I will illustrate my words so you can clearly understand.
1. Bitcoin goes in a bullrun, and money flows from fiat & altcoins to BTC: BTC moons
2. Bitcoin ranges, people are cashing out profits and will put them into low-risk altcoins. Those low-risk altcoins are big marketcap coins like ETH, XRP, XLM, etc… Those big caps start going up crazy.
3. Once Big cap coins go parabolic, profits will start flowing into higher risk coins, starting with those who were strong despite Bitcoin moves. A new cycle begins.
4. Eventually, the latter’s profits will come to every coin that has not “pumped” yet, and the craziness starts.