Bitcoin has done nothing much over the past 48 hours but most altcoins have been making big moves. This is particularly true of coins like Ripple and Ethereum both of which have made big gains against Bitcoin recently. However, something is not right. Yesterday when we were talking about how XRP/USD was rallying while the rest of the market was falling, we saw a flash crash of 67% follow soon after which was a nightmare for XRP Futures traders that were long on Bitmex.
One of the reasons why BTC/USD is trading sideways while altcoins are rallying is because the big players in the market want retail traders to buy altcoins so they can dump their coins on them. They can take their Bitcoin to an OTC (over the counter) exchange to cash out but they cannot do the same with the thousands of altcoins which would have to be sold on exchanges. This is why we saw how ETH/USD made a fake rally like this in 2018 before the beginning of a devastating downtrend that formally pushed it into a bear market.
At this point, we are looking at the next major downtrend to begin anytime soon. Conditions on larger financial markets are already shaping up to support such a move in the cryptocurrency market. The S&P 500 (SPX) appears to be close to topping out. Meanwhile, the Coronavirus outbreak is spreading rapidly and has crippled economic and day to day activities in China which a top origin country for international trade. The EUR/USD forex pair has also decline below a key support. If it closes the weekly candle below it, then we might be looking at an accelerated downtrend in the cryptocurrency market as early as next week. Near-term, traders may want to look for a decline below the trend line support on the 1H chart for BTC/USD to enter bearish entries.
Author: Jefe Caan