Produced by Ryan Wilday with Avi Gilburt and Jason Appel
Altcoins are generally highly correlated to each other and to Bitcoin. They are often more correlated to Bitcoin than stocks are to their respective indices. Many Crypto Traders Hope For Maturity crypto market where innovative altcoin projects will stand on their own.
With stablecoins now ubiquitous in crypto exchanges, altcoins no longer rely on Bitcoin for liquidity as much as they once did. Increasing trading with stablecoins is an important step towards decoupling altcoins from Bitcoin. However, as of today, we can say that whatever direction Bitcoin takes, so does the rest of the crypto market.
Below I have taken a chart of Bitcoin and overlaid colored lines to represent Cardano (ADA-USD) in blue, Ethereum (ETH-USD) in orange, and Litecoin (LTC-USD) in yellow. As you can see, the relative peaks and troughs are in the same places. Sometimes they differ in degree, such as Cardano’s low in November 2021, when Bitcoin hit a high. However, altcoins generally rise higher when Bitcoin rises and fall when Bitcoin falls.
Chart of Bitcoin vs Ethereum, Cardano and Litecoin
Bitcoin slows down the show
In Bitcoin: another detour on the Moonpath, Jason Appel, with whom I co-host the Crypto Waves service on Seeking Alpha, explained how crypto investor sentiment is in the pits. I have noticed that my Twitter feed has turned into a club of traders looking for short bitcoin setups. Jason and I consider Bitcoin’s recent action to be one of the worst structures we’ve seen near a major low at any point in our years of crypto trading. Almost every incipient rally since the January low has nearly been retraced, making it look like the market wants to crash. It’s no wonder crypto traders feel beaten down and give up.
Yet, we still view this price region as one of Bitcoin’s best opportunities since the March 2020 low. This bull cycle that started in December 2018 is very mature, but not complete. While we certainly wouldn’t expect the fourth wave flat that began in May 2021 to take nearly a year, such corrections often spawn strong moves as sentiment turns sour.
The question is whether the bottom is in it.
As of this writing, Bitcoin is pushing towards the $50,000 level. We consider this to signal a major upside breakout. The problem with this view is that our basis is not one of impulse, but rather of a corrective nature. This means we have to be careful.
It is possible that Bitcoin simply reverses diagonally, which I illustrate in black on my micro chart. The problem with diagonals is that they can’t be trusted until they’ve completed all five waves. Another option is that, rather than a flat 4th wave, Bitcoin completes a large 1-year triangle. This is shown in blue. With this in mind, the current reversal marking the start of the D wave should be corrective. Finally, in red, a WXY works where Bitcoin needs to fall in Y to the $28,000 region. WXYs are common in Bitcoin. However, until we cross $44,400, I will dismiss the red account. I’m just keeping the count for risk management, given our unorthodox reversal.
Two-hour chart of Bitcoin
Bitcoin daily chart
Some Nice Altcoin Setups
While Bitcoin makes sense, we’ve had a nice rally in altcoins over the past two weeks. I want to share a few that we have followed quite closely, accumulated quite a bit, and which show great potential when Bitcoin rises decisively.
Avalanche is a smart contract platform touted as an alternative to Ethereum. It offers lower transaction fees than the old blockchain. Total value locked in smart contracts on Avalanche reportedly reached $10 billion last month. It is healthy growth. I use Avalanche in some of my decentralized finance (CHALLENGE) work.
Looking at Avalanche’s chart, we have a nice setup for a move higher. Avalanche, at $92 and change at the time of writing, is closing in on its all-time high at $147. We have a local pattern that suggests a breakout is possible. Once above $147, the next big target is $440.
In the short term, if AVAX loses its footing and falls below $65, it may fall to $20-$30. It is not planned at the moment, and it does not change the opinion that AVAX can reach $440. But a break below $65 will certainly delay gratification.
My long-term chart suggests that we can eventually reach $4,000 AVAX. Just note that the Bitcoin bull market is quite mature, leaving little time for AVAX to achieve this goal. So for now, we’ll trade for the more reasonable target of $440. A 4X move in altcoins is quite normal.
Avalanche Day Pass
Solana is the next altcoin to watch, another alternative to Ethereum. I use it regularly. You may remember my review of the Solana board in a previous article. Overall, Solana has taken my main path from this write-up to support in the region of $70-90, so far at $75. In this article, I renew my call for a move to the $360 region to complete this circle-iii. We may eventually see a move to $1,400 as mentioned. However, that won’t happen without another major fix. Therefore, it is wise to trade this chart one target at a time.
Solana Day Pass
Mina Protocol is a relative newcomer to my articles, but we have been monitoring it in the Crypto Waves service since late last year. I admit I haven’t used this blockchain, but it touts privacy and Web 3 functionality. Using Elliott Wave Theory, I don’t need an intimate knowledge of a crypto’s functionality to perform smart transactions.
Mina has one of the nicest “1-2 setups” among the altcoins we track. This is our term for a wave 1 and 2 which sets up a nice third wave to come. MINA went very low in its wave 2 support. It bottomed out at $1.57 and we would be hard pressed to hold the bullish scenario below $1.47. So far we have a backup stick.
Despite how close MINA moved lower, it presented a very nice five-wave reversal that could kick off the third wave which targets $41, almost 20 times today’s price. Now I will warn again that the Bitcoin bull market is mature and MINA may never achieve this goal. However, the five-wave reversal we have suggests that a move of around 100% or more between $5.50 and $7.45 is highly likely. We’ll trade for that tier first, and then make sure it’s gearing up for the rest of Wave 3.
Mina Protocol Daily Chart
We understand that cryptocurrency investors have had a frustrating time as Bitcoin hit recent lows and made little progress over the past 12 months. However, the flat four wave we have been following is seen as a break in a larger bullish cycle. And while Bitcoin has put together a very uncertain reversal, many altcoins appear to have bottomed out. Avalanche, Solana, and Mina Protocol are three bullish altcoins that we are watching and trading. You might want to consider them for your cryptocurrency portfolio.