Altcoin Season Ends… for Now: $1.7B in Leverage Wiped as BTC Holds, DOGE Fights Back

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How Far Down Does This Rollercoaster Crypto Market Go Before Flying Up?

As a seasoned cryptocurrency trader with battle-scarred fingers and a heart full of stories, I’ve seen more market swings than a playground sees children. And let me tell you, these recent dips are like old friends coming to visit—uninvited, but still, familiar.

The cryptocurrency market remains relentless in testing traders’ patience. While Bitcoin fights to maintain critical support levels, Ethereum and altcoins face their own set of challenges. $ETH has been handed not one but two sharp rejections: first at $4,000 against the USD, and then at 0.04 in the ETH/BTC pair (and the Monday’s flash crash to $3500). Adding salt to the wound, the TOTAL2 (altcoin market cap) chart saw a clear rejection at the 2021 bull market peak—a critical historical level that’s now acting as resistance (see intro to my last analysis link).

For those hoping altcoin season would ride to the rescue, the numbers say otherwise: oops, the altcoin season is done… for now (see chart below from coinmarketcap.com).

Combine Bitcoin’s sudden drop (flash crash) and Dogecoin‘s up-and-down journey (rollercoaster recovery), and what you get is a market swinging between hopefulness and fear. For good measure, let’s throw in some additional intrigue:

The U.S. Dollar Drama (DXY)

The U.S. Dollar Index remains close to significant resistance levels (over 106… once more), putting a strain on riskier assets such as cryptocurrencies. If it surges past this level, it might lead to additional difficulties for Bitcoin ($BTC) and other digital currencies.

Wednesday’s CPI Data—The Wildcard

The Consumer Price Index (CPI) sets the pace for inflation patterns. If it exceeds expectations, it might postpone interest rate reductions by the Federal Reserve, thereby maintaining money supply high and potentially causing tension in crypto markets. Essentially, increased rates often pose a challenge to cryptocurrencies.

Stock Market Blues

On Monday, the S&P 500, Nasdaq, and Nvidia all experienced significant drops (down by 2.55% in the case of Nvidia), contributing to a general feeling of uncertainty or risk-aversion that extended into the crypto market. Bitcoin’s sudden drop during Monday night was just one part of a broader trend of market sell-offs.

Greed Index Says Correction Is Overdue

For several weeks now, the Fear and Greed Index has indicated an ‘extreme greed’ phase. In the past, such excessive greed in the market often leads to significant pullbacks or corrections.

Let’s get to the charts and assess where Bitcoin and Dogecoin stand amidst this chaos.

Technical Analysis

Bitcoin ($BTC)

Bitcoin’s price movement vacillates between long-term optimism and brief setbacks, raising the query about its potential drop before another surge occurs.

Key Levels

$107.5K – Bullish Pennant Target

If Bitcoin manages to surpass its crucial resistance levels again, the bullish pennant breakout suggests a potential price target of around $107,500 will be reached in November.

$99K – The Key Pivot

The symmetrical triangle breakdown level. Losing this risks further downside, but reclaiming it targets $108K+.

$90-91K – Make-or-Break Support

The critical level where Bitcoin has bounced back after every dip previously. If this level is breached, it might lead to a chain reaction of sell-offs.

$79.5K – The Golden Pocket (Retail Annihilation Zone)

In simpler terms, this particular point in the Fibonacci sequence (0.618) lines up with areas where institutions tend to buy. If there’s a drop at this point, it might help rejuvenate investor confidence for the upcoming market rise.

Momentum and Indicators

RSI and Volume

On the 4-hour chart, Relative Strength Index (RSI) is approaching overbought levels, suggesting potential for a correction, however, there’s no evidence of bullish divergence as of yet. The volume remains low, indicating uncertainty or reluctance among traders.

Moving Averages

The support levels at around $98,000 (50 and 100 Moving Averages) are flexible and may lead to a potential return to $90,000 if there’s a break down in price, as it increases the probability of such an occurrence.

Flash Crash Insight

Monday’s dip to $94K saw significant buy-the-dip activity, highlighting $90K-$94K as a short-term accumulation zone.

Scenarios

Bullish Case

Claiming back approximately $99,000 and witnessing substantial trading activity suggests a potential journey towards $107.5K. Temporary obstacle ahead at around $103K; to overcome this resistance, it’s necessary to see several 4-hour candle closes above this level accompanied by solid volume.

Bearish Case

Maintaining a drop below $90,000 could lead us to $79,500 – an essential area where institutions might consider buying (often referred to as the ‘Golden Pocket’ starting at 83k).

Neutral Case

Sideways consolidation between $91K and $99K creates a frustrating but tradable range.

Dogecoin ($DOGE)

Despite Bitcoin’s unpredictable fluctuations, Dogecoin manages to hold its form. The sudden plunge on Monday was a tough challenge, yet Dogecoin has managed to pass this test thus far.

Key Levels

$0.41-$0.425 – The Golden Pocket

As I analyze the current market trend, I’ve identified the Fibonacci retracement zone as my initial strong potential buying point for DOGE. This zone coincides precisely with the lower boundary of the ascending channel, lending an extra level of assurance to my strategy.

$0.365-$0.375 – The Accumulation Bottom

Monday’s flash crash found support here, bolstered by the 200 SMA, which is curving upward—indicative of strong momentum.

$0.295-$0.31 – The Stink Order Zone

The most significant adjustment that DOGE can undergo without shifting towards a bearish trend on larger time scales happens to be at this level. Interestingly, this point aligns with a one-month-old price gap representing its intrinsic value.

Momentum and Indicators

Ascending Channel

For more than a month now, DOGE has maintained its significance within this platform. The sudden plunge on Monday hit its lowest point, which serves as evidence of its continued importance.

200 SMA Defense

The 200 SMA acted as the ultimate barrier against Monday’s dip, adding strength to horizontal support zones.

Volume and Divergence

Volume is muted, but any spike at lower levels would signal institutional accumulation.

Scenarios

Bullish Case

Advancing past approximately $0.48, aiming for a potential volume target of around $0.60 (minimal obstacles ahead as we approach an all-time high exceeding 70 cents), this significant hurdle represents the psychological threshold for DOGE.

Bearish Case

Losing $0.365 risks a cascade to $0.31, the fair value gap zone.

Safety Strategies

Layered Buys:

Set orders at $0.425, $0.375, and $0.31.

Stops:

Tight stops below $0.36 protect capital.

Scaling Out:

Take profits at $0.48 and $0.6, trailing stops higher.

Narrative: The Contrarian Playbook

Corrections are the lifeblood of bull markets. They flush out greed, reset sentiment, and create opportunities for those who plan ahead. Whether Bitcoin dips to $79.5K or Dogecoin revisits $0.31, these aren’t death sentences—they’re buy zones for the brave.

If you’re feeling anxious with each adjustment, it might be worth considering this frank observation: you could be taking on too much at once, or perhaps you’re missing a well-thought-out strategy. Remember, the market isn’t empathetic to your feelings—it rewards those who are prepared and strategic.

Last Thoughts

Both bull markets (periods of increasing prices) and corrections (temporary decreases in price following a strong rise) are natural aspects of an investment’s life cycle. While Bitcoin and Dogecoin might continue to show growth in longer periods, the journey to success is seldom straightforward. Expect fluctuations, safeguard your risk, and remember that volatility and unpredictability are just part of the investing experience.

Tomorrow, we’ll be examining Ethereum and Solana in a thorough assessment. We’ll evaluate their performance so far in December to determine whether they’re holding strong or showing signs of weakness following their recent setbacks.

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2024-12-10 17:43