The State of the Alts – 03-04-22

STATE OF THE ALTs-4-3-22

The Global View

Top Left: Bitcoin Dominance – Daily
Top Right: Altcoin Index – Daily
Bottom Left: Midcap Index – Daily
Bottom Right: Shitcoin Index – Daily

Above we can see a snapshot of the entire Crypto market broken down into four very specific charts.  The overall Bitcoin Dominance chart shows you how much of the total market cap belongs to Bitcoin and therefore it also tells you how much of the market belongs to Altcoins.

This last week we have seen a fairly steady climb across the board in Crypto.  The very quick look will show all three indexes had a very similar wick on February 24th and all three have pushed upward outside of one day that was a pullback and the last three days which are also pulling back.  Let’s dive in.

Altcoin Index

Description: Each asset in the Altcoin Index is weighted the same.  This gives a good look at a basket of higher profile and higher MCAP coins. 

After the sweep of the lows we saw an immediate reversal in the downward pressure.  The overall Altcoin assets all recovered pretty well and in short order.  This allows the wick to act more as the starting point for a potential reversal.  Of course, this index has already abused its trendline so, breaking away from that doesn’t really do anything.  It’s interactions with the 20 and 50 EMA is another story altogether.  From here we would like to see a shot at the 200 EMA with a pullback to the 50 EMA.

Midcap Index

Description: This is the playground for most traders.  It’s widely excepted that the top tier Crypto have already made most of their explosive moves but that is not the case in the land of the Mids.  The Mids make a wide variety of projects from L1’s like Algorand to ad seeking marketing like BAT.

The Alts and Mids are so similar that its eerie.  Same type of abuse on the trend, same type of bounce play after sweeping the lows, same type of break of the 20 EMA and currently the same type of three day pullback after securing the 20 EMA.  What we can say at this moment is that the Mids are correlated to the Majors and that is not a bad thing at all.

Shitcoin Index

Description: What market in the world can you label a basket of assets and call them SHIT?  Only Crypto baby!  The SHITperp is your view through the window of our beloved Shitcoins.  These represent 50 coins that have relatively low market cap but still have stand out projects.  Coins like MANA, in and of itself is actually a great project with a bright future but its market cap deems it as Shit.  THETA, CHZ, ENJ, HBAR, ZEN, etc.  These projects are actually good projects with good fundamentals, so they skew the balance sheet a bit because these are not exactly the Shitcoins that some other people talk about when they talk about Shitcoins!

What is most interesting is the Shitcoin Index.  Generally speaking, in times of market stress and uncertainty, your riskiest plays are sold off so that you can get into something that carries less overall risk.  But here, well…. here is a different story altogether.  Shit is showing the same type of drop with the same kind of recovery as Mids and Alts.  The real difference here is that Shit completely respected its trendline whereas the Alts and the Mids did not.  When we see all three indexes working in tandem, that means that money is flowing in and being spread fairly evenly across the board.

Weekly Movers

What we are seeing here is the beginning of a potential reversal and if not a straight up reversal, then at least a pause from the continued downward pressure we have seen for months.  Reversals of this magnitude always come with a ton of caution as we are still very much trending downward and any longs are considered counter-trend trades.  

That being said, with the increase in the Indexes and the coupling of the lower timeframes trending north, there can be some opportunities for trades to the long side but take them with a healthy dose of speculation and an above average potential for failure.

Remember that all fakeouts start off as something that looks real.  The other thing to keep in mind is the potential for a relief rally.  A Relief Rally and a Rally are not the same as a relief rally comes after a long downward move and has a ton of resistance in its way.  We absolutely have a ton of resistance in the way of every coin on the market at the moment.

What to Watch

Even given the Bear Market – we still have some coins trying to buck the system and make some waves while everyone else is trending downward.  LUNA is a prime example.

LUNA/USDT:

LUNA has put in a 100% move in 10 days of trading.  LUNA for the last 30 Days is up 76% while coins like SOL, ADA, DOGE and DOT are down between 10 and 18% over the same time span.  LUNA has indeed taken resistance exactly where it should have but given the strength of the move, the pullback may not be as dramatic as it could be.  The first area of interest is $82.23 but Support does run all the way down to $49.  Again, very risky in these market conditions but certainly something to keep an eye out for.

The Wrap Up

Relief Rallies have a short time span.  Generally pushing to local 50% and 61.8% Fib levels and then dying in the most dramatic of ways.  These tend to be nothing more than exit liquidity pumps for larger whales or one last hurrah before the absolute blood comes out.  Although – there is another possibility…

There is always the chance of another Leg up.  This would actually result in a huge run that challenges and beats previous All Time Highs and reinstates the larger Macro uptrend as well as the new Daily trends that would result in such a move.  As always – Time will tell.

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