As of last weekend, cryptocurrency market reacted positively to weaker figures compared to inflation. Indices continued to rise, Ethereum returned to $2,000, but bitcoin is actually showing a lack of momentum. What will be next in the second half of August? Let’s go to our charts to try to see a little more clearly.
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Total market cap is pulling out of significant resistance
After several weeks of evolution below the red resistance zone, the market managed to break out of it. This is a good thing because it demonstrates bull market momentum which, I remind you, is always ua recovery within a bear market. After a quick reaction to the summer 2021 low, the market continued to push and is gradually approaching a technical threshold: support in May and June last year.
We’re not there right now. However, the closer we get to it, the more it will be necessary to watch out for market declines. Until the market cap loses 1,050 billion, the structure will continue to be bullish. Therefore, watch out for the red zone, coupled with a bearish reversal, as well as the trough last May. If the market is led to lose this zone, it should alert us to a a change in trend to start a new bearish swing.
Beware of the future dynamics of Ethereum-related altcoins
Since our previous cryptocurrency update, I had a chance to update this chart. From now on I use the volume profile, an indicator that I find very relevant. Here we see that altcoins have broken free from POC, the most traded level.
So, since it was a great resistance, we can expect a reversal of this area to be able to turn it into support. This zone is in contact with the resistance we have already identified in the previous weeks.
As long as this area is not lost, we can hope continuation of the bullish momentum. However, it will be important to exercise market caution when altcoins approach or reach it High value area (VAH) shown in black dashed lines.
This VAH is practically at the same level as the resistance we previously identified. This shows the importance of the levels represented on our charts and the need to be cautious. It is very possible that altcoins will pause or top in the orange zone. However, an excess of altcoins above VAH is possible. However, it seems best to wait and watch price action to see if there is a slowdown or not on the buy side.
Bitcoin dominance is still in free fall
Finally, if you’ve read my previous analysis, you’ll see that it is bitcoin dominance fills my bearish scenario right now. With the weekly scale, the goal is to take a step back. This allows for a better understanding of bitcoin’s current situation relative to the rest of the market. In my opinion, we are closer the end of the corrective movement just from the beginning. After being rejected at its upper limit, Bitcoin dominance lost its pivot zone and another key level.
It is currently heading towards its lower limit which is the effective support from May 2021. Therefore, we can expect Bitcoin to react in the green zone that I presented. This area is the junction of two levels. First, the lower limit of the current range. In addition, the low point of April 2018 to which the price reacted in early 2022. We therefore follow this level at which bitcoin will most likely return. This could allow it to regain strength and make a new rotation of capital within the crypto market.
Ever-growing Ethereum
This time I went to a smaller time unit, the H4 scale, to use the volume profile. The goal here is to show you trend strength between Ethereum and Bitcoin. The latter manages to easily turn the resistances to support them. These areas are technical junctions that contain VAH specific sessions as well as POCs. So, it is possible to play jumps quite easily. What we are also seeing is that Ethereum has managed to recapture the red zone. The latter is the major weekly resistance we identified in our previous analysis.
Is that a fake break? Or is it a sign of the continuity of the dynamics we have known since the second half of June? In order to hope for another bounce and a new high, ETH BTC must now hold above the red zone. Otherwise, it would appear to be a false breakout and failure of buyers to maintain the trend. However, if Ethereum maintains momentum and continues to set the pace for the market, we can see the asset return to 0.082 bitcoin (red dots).
Are private cryptocurrencies all the rage right now?
Currently, the privacy index is in a bearish swing pattern. Recently, the price broke the resistance corresponding to its VAL. Relying on it for support, the price exploded very quickly. I now rely on HVN (High volume node), the goal is to take over the POC. Moreover, you can see that the price reacted with a strong fuse at the junction of technical levels. This coupling includes the horizontal resistance, VAH of the current range and VAL of the previous range.
The orange zone that encompasses these technical levels is the wall that the price will have to cross. This is a challenge to achieve if it is to return to the POC lows of the old $1,655 range. If it fails and loses current support, it will be a pass through LVN to return to VAL for $1,000. Moreover, it will mark increased volatility with the return of the bearish pattern. So the next few days will be important for the index. We’ll see if buyers have a bigger appetite for private cryptocurrencies.
So here we are at the end of this crypto spot of the weekend that allows you to have a broad view of the current market situation. Be alert, some assets are at key resistances, although we may not be at the end of an upward correction. The goal is to focus our attention on the key zones that will certainly determine the change in the structure in favor of the seller. Bitcoin dominance will also be something to watch closely. Given the strong decline, it is not impossible that it will regain some strength over time the next few weeks of August.
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