This weekend’s flush out of altcoin traders and investors was probably needed. The hard fall experienced by most altcoins was likely because of heightened tensions in the Middle East. However, the crypto market is breaking back, and potential black swan events aside, a huge upside move can potentially take place.
Recovery in process
The crypto rally may be well and truly on. Bitcoin experienced a 17.5% reversal over the weekend, taking it all the way back down under $60,000, but Sunday, and now Monday have seen the beginnings of a recovery for both bitcoin and the cryptocurrency market in general.
A bleak weekend
For the altcoin market, things are starting to take shape. Over the course of Friday and Saturday things were looking bleak. Heightened tensions in the Middle East were making their effects felt in the crypto market, and especially on the altcoins, which remain the furthest assets out on the risk curve.
From Friday’s opening candle, the altcoin market cap dropped as much as 14.4%, and then followed this up on Saturday with a fall that went as deep as a further 16%. However, the recovery started later on Saturday, as the large red candle down was bought back up, leaving a long wick underneath.
Total 3 market cap trend is smashed to the downside
Source: Coingecko/Trading View
The extent of the move can be seen in the Total 3 chart above. Total 3 is the combined market capitalization of all altcoins excluding $BTC and $ETH. The trend was completely smashed by the dip, but it can be seen how the altcoins market cap has recovered by rising to touch the trend line.
Bearish confirmation?
This could be seen as a bearish move, given that the price is up against strong resistance now that used to be support. This could become a confirmation and a continuation of the downside move, unless the price can break back above the trend and flip resistance into support once more.
Bullish cup and handle
Source: Coingecko/Trading View
Zooming out further into the weekly time frame, things look rather more bullish. It can be seen that the price has held support at $645 billion, and that it has also returned above the trend line. The next move, from a bulls perspective, would be to head back to the $786 billion resistance. Another extremely bullish thing to note is that a very large cup and handle is forming. The cup is already printed, and this weekend dump has succeeded in starting the formation of the handle part of the pattern. If the price gets back to $786 billion, it would just need a break and confirmation of the resistance, for the cup and handle pattern to start playing out. A measured move for the pattern would take the price to $1.285 trillion. Hold on to your hat!
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
