Cryptocurrency market update: Consolidation ahead

This month couldn’t have got off to a better start.

After the huge Bitcoin pump we saw in late October, where the price of BTC increased over 40% in the space of 24 hours, it seems the market has now stabilised.

I personally expect the positive trend to continue this week following the recent news that President Xi Jinping wants China to be a key player in the blockchain space.

It’s notable that following Xi’s comments, there was a massive surge in searches for “blockchain” and “Bitcoin” on WeChat.

In addition, the endorsement for blockchain may kick-start a wave of adoption by the Chinese, especially by businesses, just as the brand new government-backed cryptocurrency is getting ready to launch.

Let’s take a look at the current state of the cryptocurrency market.

Bitcoin dominance (BTC.D)

Bitcoin’s market dominance is now close to 68% after dropping slightly from 70% since late October.

This was to be expected given there are a lot of altcoin speculators and investors in Asia who saw the China blockchain news as a huge boost. After the initial spike in BTC/USD, we see there’s a sudden move from Bitcoin into altcoins as the market stabilised.

I argue that some investors have taken a gamble on altcoins and will soon profit from short-term gains if Bitcoin pumps again.

Let me further my analysis by looking at some of my favourite altcoin/Bitcoin pairs.

Hopefully there’s still a good opportunity to scoop some key cryptocurrencies before the altcoin market pumps massively again.

ETH/BTC

The first thing I notice in the chart above is that ETH/BTC has recovered after dropping below all its EMAs in October. It is now above its 20-day EMA and is trying to consolidate above its 50-day EMA.

With some more fresh cash coming into Ethereum, mainly from Tether and Bitcoin, I expect the altcoin to rise above its 200-day EMA before the end of the year.

Last month, I mentioned how the volume profile on the left shows there’s some support for ETH/BTC just above 1,800,000 sats, which means we could expect to see Ethereum consolidating at this price level. However, ETH seems to be doing even better, accumulating above 2,000,000 sats.

ETH recovered from around 1,600,000 sats in early September to over 2,300,000 sats in mid-October, representing a 31% increase in price.

Shortly after, the Bitcoin market started its recovery and Bitcoin pushed 40% higher versus the US dollar. That pump put downwards pressure on Ethereum, with price falling below 1,950,000 sats.

When the coin finally starts its recovery, there’s strong resistance between 2,000,000 and 2,300,000 sats, where ETH was previously consolidating before the drop last month. Let’s see if ETH holds.

XRP/BTC

Ripple (XRP) is still suffering from a downtrend.

However, even though the coin is trading just below its 20-day EMA, it’s showing signs it wants to start its recovery.

After the massive BTC pump in late October, XRP experienced a 23% drop against Bitcoin that took the altcoin from around 3,700 sats to 3,000. Since then, XRP has recovered to around 3,100 sats, where it’s currently sitting.

Looking at the volume profile, there’s strong support around this level, with weak resistance until around 4,000 sats. If there’s a sudden pump, we could see XRP breaking through its 20-day and 50-day EMAs with relative ease. The next strong resistance levels appear at over 5,000 sats and then again close to 8,500 sats.

For the moment, I expect XRP to consolidate for a short period before a pump towards 4,000 sats.

BCH/BTC

The chart for Bitcoin Cash (BCH) is currently looking bullish in the short term.

BCH has been able to break above both its 20-day EMA and 50-day EMA and is now trading at over 3,200,000 sats, which has not happened since mid-August.

In my last BTC/altcoin market analysis, I mentioned it was important for BCH to break above these two levels in order to consolidate above a key resistance level near 3,000,000 sats.

Looking at the current trend, I expect Bitcoin to pump a few more times before the gains start spreading into key altcoins such as Bitcoin Cash.

Given the above scenario, I believe BCH will continue to consolidate above 3,000,000 sats and will soon break its 200-day EMA at around 3,500,000 sats.

XLM/BTC

At the time of writing, Stellar Lumens (XLM) is trading at around 871 sats after a 14% pump from 750 sats during late October.

XLM is now trading above both its 20-day EMA and 50-day EMA. But XLM hasn’t been pushing as high as some other altcoins. Nonetheless, the altcoin was almost able to break above a key resistance level around 850-900 sats.

If Stellar is able to break above 900 sats and consolidate near its 200-day EMA, I personally believe we’re in for quite a pump.

My end of year expectation is that XLM consolidates above 1,000 sats.

NEO/BTC

As mentioned in my previous BTC/altcoin market analysis, if you are looking for a gem that is outperforming the market, look no further than NEO.

NEO is currently one of the best-performing altcoins versus Bitcoin and is showing positive signs of maintaining its trend. As reported by Coin Rivet, the altcoin pumped 40% versus the US dollar following President Xi’s blockchain announcement.

In addition, NEO has pumped another 15% in the last few days. It is now the best-performing altcoin versus BTC since the October pump.

Looking at the graph above, there are three main reasons why I’m bullish on NEO. The first is that price broke through major resistance levels with ease at around 90,000 and 120,000 sats. The second is that NEO is now trading above all its EMAs. Finally, the altcoin is currently looking to break a major resistance level at around 160,000 sats.

If NEO maintains its uptrend and consolidates near its 200-day EMA, we could see the cryptocurrency breaking above 150,000 sats soon.

Safe trades!

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