The altcoins continued their bloodbath crash late into Tuesday, with the likes of Ethereum (ETH) down 38% from its August high, while Solana (SOL) crashed 42% from its own September high. Is the current bounce just a relief rally with more downside to come, or is the start of a new upside wave that could take altcoins back to their highs?
Total2 is the chart of the combined market capitalization of all cryptos excluding $BTC. Therefore, it’s the altcoins with some stablecoins thrown in. Still, it’s a good enough measure of how the altcoins are performing relative to USD.
It can be seen that the collapse tagged the $1.25 trillion horizontal support level, but passed through the ascending trendline in order to do so.
As it stands, a bounce occurred from the support level and now the bulls and bears are in a struggle for domination of the $1.31 trillion horizontal line. The $BTC price has already been up to tag the ascending trendline. This was either the first knock at this level before an eventual break back above, or it was a confirmation of the breakdown. The next few days will be critical as to whether the bulls can break back above, or whether they will succumb to further downside.
The above chart is not a good setup for $ETH. It looked as though the combined support of the bottom of the channel, and the ascending trendline would be enough to hold the price and enable a bounce to take place from there. However, the fact that descending channels normally break upwards, and the failure of the combined supports, means that this breakdown is even more bearish.
The current price action shows that $ETH has been back to confirm the breakdown of the $3,350 support and flip it into resistance in this time frame. Nevertheless, it might be expected that the price also comes back to confirm the trendline and the bottom of the channel, given their importance. Perhaps this would offer one last chance to the bulls to break back above.
The daily chart for $SOL is another story. This shows that the price held in that downward onslaught, and it held at a very strong convergence of the bottom of the descending channel, and the 0.618 Fibonacci level. The price did fall below momentarily, but the bulls bought the price back up fast enough to keep the candle bodies above, and relatively long wicks below.
There is still the no small matter of the failure of the ascending trendline, but given that the $SOL price has been chopping around in this range since March 2024, and also back in 2021, surges and reversals are bound to take out the trendlines here and there.
At this point in the game it might be best to protect one’s capital rather than lose more of it in speculation. If the whole crypto market is starting to sink into a bear market, holding altcoins could become an extremely painful experience.
Arguably the best strategy would be to keep eyes on the market and look for the bulls to regain the important levels first. Trusting gut instinct is more often than not a losing ploy in markets. One thing is for sure though, this market is balanced on a knife edge and could go either way. Trade with the utmost caution.
Read more on cryptodaily.co.uk
