4 September 2021: Multiple altcoins made large moves up over the past 7 days, including the likes of Ethereum, Polkadot, & Solana. Historically, market pressures in the month of September have made for a volatile trading months in many coins with Bitcoin taking point. This weekly market update will focus on current price action and project some insight as we move further into September.
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Bitcoin Upward Price Channel Invalidated
In our previous weekly market installment, we suggested that Bitcoin would break into the $50,000 USD range come September. After a brief pullback, Bitcoin found solid support at $46,500 and proceeded to bounce over $50,000 which it currently holds now. However, Bitcoin did fall permanently out of the previous short term upward price channel. Check out the chart below:
Bitcoin is now using our previous short term upward channel as resistance while also reaching the top of the long term price channel situated at $51,000 USD. With historical data indicating September as a tough month for Bitcoin combined with already greedy market sentiment, volatility moving forward into next week should be expected.
It is also extremely important to note that El Salvador, the very first nation in the world to adopt Bitcoin as official legal tender, is scheduled to make the Bitcoin law official in just three days - an event that has been anticipated with massive enthusiasm for months. From current price levels, taking into account all factors, over the short term Bitcoin will either experience a massive breakout through resistance at $51,000 USD or have a small pullback of possibly up to 10% down to the bottom of the current long term price channel at approximately $44,700 USD.
A correction of 10-11% down to the bottom of the current price channel would be just over the monthly average of September for Bitcoin using data back to 2014. Thus, due to expected volatility regardless of the direction of price, we do recommend ensuring an increased percentage of your portfolio be in stable assets - either trustworthy stablecoins or just in FIAT for protection against wild price action and to take advantage of dips when they show. How big of a percentage is up to the individual based on his/her risk tolerance.
Altcoins Turn Into Rockets
Multiple altcoins had big breakouts over the past week, including the likes of Ethereum, Polkadot, Solana, Litecoin, Chainlink, & Algorand. The biggest gainer has been Solana with a 60% move up over just the last seven days. Solana is followed by Polkadot, Litecoin, & Ethereum with each having made gains of over 20%. The aforementioned top four altcoins will be the focus below.
Solana (SOL)
Solana (SOL) has experienced a massive move up since it broke above its 50 day moving average at the end of July. Since then, Solana is up over 300% and over 60% in the past week. These gains make Solana one of the best gainers in the cryptocurrency market over the month of August. It is imperative to note that Solana is also over the 50 day moving average by 155%, making it prime for a major cooldown in the future. Take a look at the chart below:
While we are not bearish on Solana, with substantial gains being made in the past month without a pullback, it is important to move forward with caution should anyone be looking for an entry point into Solana. An entry point could either be a sizable pullback or simply just a period of consolidation in which the price of $SOL stays stable for a period of time.
Polkdadot (DOT)
The rally since mid-July on Polkadot (DOT) has made for great gains since the May correction in the market. Over that time, Polkadot has actually experienced about a 3x ROI (return on investment) for holders of $DOT. In fact, Polkadot is only around 40% off its all time highs and has had relatively steady growth upward since the correction. Check out the chart below:
With steady gains and stable growth, Polkadot has been a great hold over the past week, making for an approximate 24% gain. With Polkadot not being a market mover, it is important to stay on top of broad market sentiment for directions on $DOT, with particular attention to the relationship between Bitcoin & the broad market as well as the sentiment on Ethereum.
Litecoin (LTC)
An altcoin that RekTimes rarely provides analysis on, Litecoin (LTC) has recently had a major breakout, so it is absolutely worth a quick analysis here. Litecoin has experienced a breakout within the last 24 hours, with half of its weekly gains (around 24% or so) coming in the past day. A well-known alternative to Bitcoin and having a similar operating structure to that of Dogecoin, Litecoin is a popular alt that is generally a stable asset. Check out the price action below:
Litecoin is generally quiet in that it does not received the massive hype that many other altcoins do. However, when looking to diversify a cryptocurrency portfolio, during stable price action Litecoin is generally a solid pick.
Ethereum (ETH)
Last up is none other than Ethereum. After $ETH bottomed out at $1750 USD back in July, the most famous altcoin has rallied nearly 120% up to approximately $3900 USD in which it currently sits. While overall market sentiment has been extremely bullish for over a month now, the major rise in Ethereum has mostly been fueled by the London Hard Fork EIP-1559 change that was implemented. This new Ethereum upgrade allowed for the burning of $ETH, helping to fuel upward pressure on the price. Check out the chart below:
Currently, Ethereum is actually back testing what should now be support at $3890 should it hold after another break up into the next price channel. To go back to EIP-1559, with a new squeezing of the supply of Ether, the price should be expected to rise steadily over time with occasional pullbacks based on market sentiment.
It is important to note that EIP-1559 did nothing to assist in the lowering of gas fees and passed much of the gains in Ether to the miner pools themselves, however as far as longevity goes that is a subject for a coming article. As far as this weekly analysis goes, Ethereum is a no brainer hold going forward.
Summary
With major rallies in altcoins and a Bitcoin at double resistance, the beginning of the September trading month could be one for volatile price action. It is always imperative to ensure protection of your portfolio through a percentage in stable assets, however once again it all depends on the individual's risk tolerance. RekTimes is more or less neutral on a number of assets over the short term and extremely bullish over the long term. Our weekly markets analysis will return next weekend. Until then, we wish you the best of luck in your portfolio building!
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