2018-08-13

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...

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