From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
Are we finally entering the long-awaited alt-season?
We’re seeing incredibly healthy rotation within the Cryptocurrency space, which we can only interpret as support for higher prices for this group of digital assets moving forward.
We’ve been bullish on Bitcoin $BTC and crypto since last summer when BTC was near 10,000.
Here’s a post in October where JC outlined that the path of least resistance was higher in BTC, and another in December where we outlined a target, which was hit in a matter of days. Our current target for the Crypto leader is 70,000.
The price action is clear: Crypto continues to benefit from a well-established uptrend.
Our main focus today is the broadening participation of many Altcoins (lingo for any Cryptocurrency not named Bitcoin).
Several Altcoins are now breaking higher along with Bitcoin. Not only is this evidence of bullish risk-appetite in the Crypto complex, it also expands our options in taking advantage and profiting from this theme.
Let’s jump right into it with this week’s Mystery Chart! It was inverted and almost everyone who participated was selling it…
In this case, selling our inverted chart means you’re actually a buyer of this breakout in Altcoins. The chart shows the total Cryptocurrency market cap, excluding Bitcoin, recently reclaiming its key prior highs from late 2017.
Growing from under $50M in 2016 to a total value of over $600B today is incredible — and has represented one of the best opportunities across financial markets over the past decade. We still think there is plenty of room left to profit from this trend.
Despite how “over-extended” Crypto may appear at a glance, the reality is a large chunk of the asset class is still below the 2018 highs and just now breaking out.
Seeing all these fresh breakouts and new all-time highs suggests we’re likely in the early innings of a new bull market in Cryptocurrency… not the end of an old one.
We also performed an extensive analysis of these trends on a relative basis. The chart below represents a ratio of the top 15 Altcoins on an equal-weight basis, relative to Bitcoin.
As relentless as the uptrend is on an absolute basis, Altcoins have severely lagged Bitcoin over the long-term.
With that said, the ratio rebounded off key support in recent months, sparked by a failed breakdown and bullish momentum divergence at the 2017 lows. The characteristics are now in place for a potential trend reversal, or at least a significant counter-trend rally that favors Altcoins over Bitcoin.
And to be clear, this is definitely more about the strength in the numerator (Altcoins) than any weakness in the denominator (Bitcoin)…
Let’s step back and review:
- The absolute trend in US Dollar terms is unequivocally higher for Altcoins
- There are also early signs of relative strength from these riskier digital assets
With a typical Altcoin carrying a drastically lower market-cap than Bitcoin and far less liquidity, we definitely want to own these smaller coins if this relative trend continues to play out as they are the higher beta plays in the space.
Let’s dive in and outline some long setups in coins that are already exhibiting leadership and offering an excellent risk/reward profile at current levels.
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