Crypto Selling Resumes, Monster Topping Pattern on Ethereum, Watch Out FANGs

Most cryptocurrencies are not at new lows, but if they hold current levels (as of this post) they will "close" at new lows. The center of attention right now is Ethereum. It is tracing out a massive topping pattern. If this pattern breaks, a return to the $10 range looks very likely. There's a little support around current levels, but if the selling resumes, I don't see a lot of support between here and $10.

Bitcoin remains above the kep $6,000 level. If Ethereum breaks below here, I expect Bitcoin will lose $6,000 and the plug will be pulled on many altcoins. There are topping patterns in many charts as I've shown. One altcoin that remains a reliable indicator is Decred. As long as it's out of its channel, the cryptocurrency market is at higher risk of disorderly selling (crash).

Finally, cryptocurrencies were the bleeding edge of speculative activity. The breaking of topping patterns in majors such as Bitcion and Ethereum will be a signal that stocks, particularly the FANGs, are on thin ice. Here's Alibaba (BABA), for example, sporting a topping pattern similar to Ethereum. Not as massive a topping pattern or with as low a target, but it will cause far more losses. Ethereum has a $20 billion market cap that could go back to $1 or $2 billion, an $18 or $19 billion loss. Alibaba's market cap is $417 billion. A measured move off its topping pattern would cause $117 billion in losses.

The Coinpocalypse

There might be another stick save for the cryptocurrency market because every time it seems like Bitcoin will make the final backbreaking drop, someone steps in to prop it up. That said, with Bitcoin losing $6000 again and many charts already turning ugly, it looks like the "shitcoin" apocalypse is underway. Previously, many alt-coins would also hold above key support levels, but this time some alt-coins are in full collapse (I don't think it is a coincidence this is happening the same time as the Turkish lira is tumbling). The coins below are a mix of coins I know little to nothing about, as well as some that have strong networks or development teams, and some that I think will survive. I'm putting them all together because the market was blown up by speculators and the dumb money doesn't know the difference, as evidenced by the same chart patterns over and over. Consolidation will take place as some coins gain developers and others lose them, but the charts will all look the same for awhile during the panic phase of the bear market because speculators flee everything.

Sentiment is turning, as it always does. Reddit: HODL is dumb as rocks.

The horizontal I have drawn on Bitcoin is at $5968. Cryptos are so volatile that the lines are more like guidelines. What's interesting to me is Bitcoin could easily slip into the rising channel that started in 2015. Current range is $3500 to $6500. If it manages to hold in that channel, that is still an extremely bullish trend and should be celebrated as a huge victory for Bitcoin long-term. The run-up to $20,000 in the meantime means many people have suffered large losses and the sentiment shift is extreme, but Bitcoin is still far from being a failure. If you're an optimist that's a great way of looking at it. If you think it's all a scam, then that leaves plenty of room for even more losses.

Some of the charts are already starting to retrace their breakouts, such as Ripple and OmiseGo. Some are still well above support such as Decred. Some have businesses behind them, such as Golem (though I haven't checked on it recently) and the BAT is part of the Brave browser.

Many people think technical analysis doesn't work, but it's based on human psychology. It works well with cryptocurrency because it's a market filled with amateurs. The more emotional the market, the better it works. Also, there may have been manipulation by people who understood TA. Whatever the reason, the charts are already breaking down or on the cusp of the last line of support for many coins.

I usually don't include the volume, but it helps illustrate why TA can be effective. Many of the alt-coins have sharp run-ups on low volume. Those HODLs, if they're still HODLing have a profit. Litecoin might be the best example given its size and popularity. There's an area of support around $40 to $50, from July to November 2017. Volume is higher and there could be many HODLers in that area. If Litecoin stays above $40 many may hold. If they sell, then there are very few HODLers left. That's why the price could waterfall decline and retrace the April to July 2017 run up. Then it may stabilize in the single-digits assuming it is a survivor.

Finally, this is a classic collapse of a speculative bubble. It might benefit stocks in the near-term, but it strikes me as bearish, and not only because the stock market was tracking with cryptocurrencies earlier this year. Consider a stock such as Nvidia (NVDA) that sold the GPUs used by cryptocurrency miners...

Monero Breakdown

In the post on Sunday I wrote:

Monero is ugly. The next support is the psychological $100 level, the the prior basing pattern around $85, then the prior breakout/support level at $60.

It is breaking down again today. Other major coins are relatively steady near recent lows.

Decred also broke to a fresh low since Sunday, a negative sign for crypros in general since it has been a very reliable indicator.

OmiseGo is also off sharply today and below support again.

Crypto Massacre, Nasdaq Next: Bitcoin Crashes Through Support

Bitcoin has taken out a major support level. It briefly traded below $6000 in February, but that was quickly reversed. This move needs to reverse or it is a major bearish signal. Quick take: sell Decred if bearish, buy Monero if bullish on this price plunge. I remain intermediate-term bearish and expect Bitcoin will eventually trade below $5000.

Intraday and long-term chart of Bitcoin:

Decred holding up well as expected, but if Bitcoin doesn't rebound, there's a lot of room to drop.

Ethereum still well above support, but it's an 18 percent drop to support.

This bear move will escalate if Litecoin falls below $100.

Omisego

Monero is ugly. The next support is the psychological $100 level, the the prior basing pattern around $85, then the prior breakout/support level at $60.

Crypto Breakdown Looms Again

Bitcoin, Litecoin, Omisego and Decred are all near important support levels. Monero has already broken below support and remains the weakest of the group. Ethereum is farthest above support.

Bitcoin is still the most important cryptocurrency and is the engine pulling the train. Decred is the strongest of the group and is also the most "reliable" in its behavior. A break down along with Bitcoin would be an important signal.

A breakdown will have bearish implications for the stock market.

Crypto Breakdown Looms Once Again, Bearish for Stocks

Bitcoin is approaching major support at $7000. Other major cryptocurrencies are already at or through important support levels. Monero has broken through major support to the downside. Litecoin and Omisego broke back below support ) former, now once again resistance. Decred, which has been as close to a Swiss timepiece when it comes to hitting highs and lows in its channels, is threatening to break below. Ehthereum is above support, in a similar position as Bitcoin. A break lower in Bitcoin opens up a drop to a 4-handle or roughly ~30 percent. As goes crypto, so goes the stock market.