Long-Term Cryptocurrency Analysis: Ethereum, Ripple, Litecoin

On Wednesday night, several traders were wondering if the cryptocurrency market was in for another major correction, as Bitcoin fell by 10% in a short period of time. To answer that question, we took a step back and looked at the long-term chart of the most valuable crypto-coin. We concluded that it’s still in an uptrend both short-and long-term, but also added that:

Is this the best time to buy Bitcoin for the long run? Probably not, even if the fundamentals are there, and it will most likely rise much further than the current levels. So, why it is not a good idea to buy it? Because a 30%-40%-50% correction, that has been normal for Bitcoin in the past, is a huge psychological burden that makes a panic sale likely, usually just before the bottom. Because of this, it is better to wait for the correction and oversold readings, even if you will buy it at a higher price later on.

Not All Coins Are Created Equal

Are the other cryptocurrencies any different regarding the long-term picture?  As all the major coins were strongly correlated during the 30+% correction two weeks ago, one might believe that, in fact, all of the coins have a similar long-term technical setup. Today we will take a look at the other three most traded cryptocurrencies, and show that this is not entirely correct.

Ethereum

ETH/USD, Long-Term (Daily) Chart

Ethereum is in a similar technical position as Bitcoin, being overbought after a monster rally, right at its all-time highs. ETH dropped as much as 50% two weeks ago but that wasn’t enough to clear the overbought readings on the momentum indicators because of the quick snapback rally. Last time ETH was showing neutral momentum readings on the daily chart was in late April, when the price was at $50. This year Ethereum experienced a 500% and a 600% rally, both coming after a consolidation period.

Litecoin

 

LTC/USD, Long-Term (Daily) Chart

Litecoin’s chart is looking promising from a long-term perspective, as LTC is after a lengthy and deep (-55%, after 1000% of gains in 5 weeks) correction, while several signs point to a bullish turning point. The MACD indicator provided a buy signal, the price has been consolidating in a narrow range below the top of the consolidation pattern, and trading volumes have been declining progressively during the correction. While it is entirely possible that LTC will consolidate more if Bitcoin enters a correction, it will likely outperform both BTC and ETH in the coming weeks.

Ripple

 

XRP/USD, Long-Term (Daily) Chart

Ripple has been the most volatile major coin, rising 7-fold in two months, and experiencing a 70% decline since then. The three-week long correction carried the MACD indicator close to neutral territory, but it still shows bearish readings. XRP might need more consolidation before a significant break-out, but it is closer to a long-term buy signal than BTC or ETH.

How to Use These Charts?

If you believe that cryptocurrencies are just at the beginning of their success stories, then there are several ways to profit from the boom. As we stressed in our article on Bitcoin:

“…not all strategies are binary (either holding an asset or not).There are many long- and short-term investment and trading strategies that can be successful in a roaring bull market like the one that the crypto-coin segment is experiencing, but mixing the time-frames and mixing trading and investing (see our article on the topic) could lead to troubles.”

Here are some of the possible strategies:

  • Buy and hold, without caring about day-to-day (or even month-month) fluctuations
  • Buy and hold a core position and add on the major dips; a very powerful strategy
  • Buy a certain amount every week or month, and even-out your entry price, without the hassle of timing the market
  • Try to catch major turning points to reduce and “re-boost” your position
  • Trade short-term movements with stop-losses, targets, and strict risk management (this is trading not investing)

We will keep on providing all the short- and long-term information you need to pursue whatever strategy you choose. Stay tuned for our detailed analysis on every weekday.

 

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.