Crypto Price Analysis: Ethereum and Litecoin to Follow Bitcoin
New retail traders caught by the violent swings of bitcoin (BTC/USD) over the last few days may be seeing red in their portfolios. The number one cryptocurrency is losing steam as those who bought early, the smart money, are now taking profits at the expense of those who bought due to the fear of missing out (FOMO). The good news is that the profits gained by the smart money will flow into other crypto tokens that have yet to make a massive move. We have two major cryptocurrencies in mind that are primary candidates for this capital flow.
The Market Structures of Bitcoin and Ethereum Show Striking Resemblances
If you look at bitcoin’s weekly chart, you will see that the leading cryptocurrency went through five distinct stages in the last year and a half. The first stage is the heavy distribution. The smart money sold from $19,891 all the way down to $6,000. They maintained $6,000 as support so they can distribute more positions over a longer period of time.
When they were done distributing, they took out the support and drove the market down to $3,215 to mark the capitulation or the selling climax. The smart money then stepped in to stop the bleeding as well as accumulate bitcoin at dirt cheap prices between $3,200 and $4,200.
When they were done accumulating, they ignited a markup that saw bitcoin recently climb to as high as $13,764. That price level coincided with the 61.8% Fibonacci level. Unsurprisingly, that’s the price area where the smart money who accumulated at the bottom began to dump positions.
A look at the Ethereum weekly chart shows that the number two cryptocurrency is following bitcoin’s footsteps.
So far, it has gone through the first three stages of the cycle. It now appears to be in the early stages of its markup phase. If it truly shadows bitcoin’s pattern, then we will likely see the cryptocurrency trade above $900, which is the 61.8% Fibonacci level. Interestingly, $900 is the market’s heavy resistance from the long-term perspective.
Litecoin Closely Follows Suit
Litecoin appears to be on the same boat as Ethereum. The cryptocurrency has also gone through the first three stages. It is now in the midst of the markup phase as it looks to retest the 23.6% Fibonacci level as support. Once that’s out of the way, we believe that Litecoin will resume its rally and target the 61.8% Fibonacci level at $237. Similarly to Ethereum, this price area is a heavy resistance from the macro perspective.
A quick look at the charts above and it is difficult to deny that the market structures of bitcoin, Ethereum, and Litecoin share multiple resemblances. In fact, you’d be hard pressed to see any difference except for the markup phase. This is the stage where we expect Ethereum and Litecoin to follow the lead of the king of cryptocurrencies.
Fortunately, capital is flowing out of bitcoin. Ethereum and Litecoin appear to be the primary candidates of the possible capital influx.
Disclaimer: The writer owns bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
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