With bitcoin currently in a short term correction to the downside, it may be an opportunity for the altcoins to make their move to the upside, at least in bitcoin value. Generally most major investors, especially institutions, are purely buying bitcoin and no other. But the retail market as well as traders, are keen to use the altcoins as a swing trade in and out of bitcoin. In this way they increase their BTC holdings. Are we about to see another little altcoin pump, now that bitcoin is retracing significantly?

Generally when BTC moves, the alts move with even more volatility – both to the upside and the downside, compared to bitcoin. So if you time your entries and exits, a day trader or swing trader (over a few days) can make some significant gains in their BTC stack. This is a way to make more bitcoin without investing any more fiat currency. Simply sell into your chosen altcoin when you see it topping out, and then sell that altcoin back into BTC as it too peaks in the short term, according to the trend.

Altcoins are not as reliable to hold as an investment long term, in my opinion, because there are so many of them and it may be hard to choose which ones will be big movers or massive gainers. Obviously we look for worthwhile use case, good team and smart coding, and that requires lots of investigation. So if you are into the cryptocurrency space, you may enjoy searching for the next big project to 50x your investment.

Or you may want to invest in the legacy altcoins that are tried and tested, like Ethereum, or any of the top ten by market cap. At least they have been accepted and traded widely already and are solid projects in their own right, we presume. After all, you need liquidity in the market so that you can be sure of a selling opportunity if you should choose to sell that altcoin at profit.

The top altcoin is, of course, Ethereum, with a legendary team, use case and liquidity. And so it is the primary token to invest in after bitcoin. However, even the top ten can change places over the years. Just look at NEO, TRON or Monero and you will see some legends of former years who have fallen out of the top ten. But ETH has remained in the No2 spot for years now. So it is a safe investment.

Now that we can be sure that ETH is a worthwhile investment, would this be a good time to buy some more ETH for your portfolio? Let’s look at the purely technical analysis of the ETH/BTC chart.. ETH has had a recent pump from 0.0263 BTC up to 0.0336, which is around 28% gain just over two weeks ago. However, since then price has lost half of that gain. It seems to have found support on the 200 daily MA just above 0.03 BTC for the past few days, which is still 15% up from the previous lows of November.

Now historically ETH has been known to pump in January, a month after BTC which pumps in December. This is a generalization based on previous years’ price history, though is by no means a certainty. Still, with this strong support on the 200 daily MA, and a clear indication that ETH is following BTC in the overall bullish macro trend this year and next, this exact time may well be a good opportunity to buy ETH with the aim to sell it for BTC when in profit.

The overall goal is naturally to accumulate more BTC, and the alts, even ETH are a means to that end. The current flag pattern on the ETH daily chart appears to suggest that a further breakout to the upside is about to occur. Especially if we keep a firm eye on BTC itself, and notice how it may be set for further downside momentum.

Of course generally all the alts are pulled down with BTC, most much more so and with greater volatility, as I mentioned earlier, but at the correct moment one can buy the dip and profit much more from an ETH trade in BTC value. And if we look at the ETH daily RSI, we can see that it has remained above 50 ever since 20 November, when it broke massively to the upside.

When the RSI remains above 50, it is a clear indication that the asset is in bullish mode. The 50 on the RSI has held as support more than once and yet has not been broken for many weeks now, even though price has corrected significantly. This is a clear sign that there is more upside to come.

With this in mind, and the knowledge that cryptocurrency (particularly BTC) is now in a macro bullish trend this year and next. I see this as a good entry point into ETH. The 200 MA on the 4 hour chart has also been acting as support and has not been broken or even touched by a wick to the downside, except once on 26 November, when it acted as clear support. So the trend is looking bullish for ETH right now, against BTC.

This is not financial advice, of course, and merely my opinion on the day. As price action changes, so my opinion may change. I simply react to price signals as I see them in real time, from a technical analysis perspective. Let me know if you are bullish on ETH now or if you prefer to stick to BTC. I’m always keen to hear your opinions and to learn.