The Deal with Dip
The market is dropping because leveraged players are being washed out, and people fear more aggressive Fed rate hikes. In technical analysis, it is healthy for a market to flush weak longs. These flushes can lead to a powerful uptrend once these players go to buy back in.
As far as the Fed goes, the Fed will talk tough and do a massive rate hike in September. Once that is over, the market will begin to trade the coming recession. This could be bullish for crypto.
In the meantime, the crypto market will probably slump or go sideways as traders give up headed into the U.S. Labor holiday in early September.
Let’s look at some key technical levels.
ETH: 4-hour chart
Past performance is not indicative of future returns.
We are keeping an eye on two key support levels in ETH. The first is $1,523. That level is the 50% retracement of the recent move up. The second opportunity could be at $1,405. A move to that level would likely be scary. That said, the focus should likely be on points to consider buying.
Bitcoin: Daily
Past performance is not indicative of future returns.
On the one hand, bitcoin has a lot of obvious support, near $20,000. $20,500 is the 62% retracement of the recent run-up. $20,200 is support from hidden pivot analysis.
Altcoin Market Cap (TOTAL 3): Weekly
Past performance is not indicative of future returns.
Total altcoin market capitalization (TOTAL3) has corrected after hitting a key resistance point near $427 billion. This level was near some key chart points that go back to February 2021. Altcoins have outperformed of late, so a correction is natural. Headed into the ETH merge, altcoins may underperform as vast sums of capital from crypto and legacy markets could flood into ETH.
Bottom Line
The dip in August turned out to be bigger than expected. People are selling in fear of old news about inflation and a hawkish Fed. The fear trade may be overdone. Patience has paid off, and it may continue to do so. The up trend may resume after Labor Day.
