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Ethereum Steady Despite Market Correction but Altcoin Market Cap Lags Behind

Published June 21, 2024 3:12 PM
Valdrin Tahiri
Published June 21, 2024 3:12 PM

Key Takeaways

  • Ethereum’s price nearly reached the point of convergence between long-term resistance and support.
  • The Altcoin market cap broke out from a corrective structure and trades inside long-term support.
  • Can Ethereum drastically outperform Bitcoin and drag the rest of the altcoin market with it?

Ethereum’s price has performed worse than Bitcoin for over three years. The downtrend was expected to deepen in the start of 2024, but a significant bounce put an end to the correction. The same thing is transpiring during the ongoing June correction, when Ethereum holds up while Bitcoin shows weakness. 

If the pattern continues, Ethereum can finally break out from a long-term resistance trend line and end its underperformance against Bitcoin, Will it do so, and if so, will the rest of the altcoin market perform similarly?

Will ETH/BTC Finally Break Out?

The weekly time frame ETH/BTC price chart shows a downward trend alongside a descending resistance trend line since July 2022. During this time, it has made several unsuccessful breakout attempts (red icons). 

In February 2024, it seemed that the price broke down from the ₿0.0520 horizontal support area, which has existed since April 2021. However, an upward trend started in May which reclaimed the horizontal area and caused another breakout attempt. 

This was preceded by a bullish divergence in the weekly MACD and RSI (green). A divergence in such a long-term time frame is rare and often leads to bullish trend reversals. This has been the case for the ETH/BTC pair so far.

Ethereum Bitcoin Chart
ETH/BTC Weekly Chart | Credit: Valdrin Tahiri/TradingView

So far, the descending resistance trend line has existed for 651 days. The point of convergence between the resistance trend line and support area is by the end of July. So, a decisive movement is expected by then.

Because of the price action and indicator readings, a breakout is more likely. If this happens, the next resistance will be at ₿0.0635.

If this breakout happens, it can trigger a nearly equal breakdown in the Bitcoin Dominance Rate (BTCD), which has followed its own ascending support trend line since November 2022. 

Similarly to ETH  before its reclaim, there is a bearish divergence in the weekly RSI and MACD (green), which can catalyze this breakdown. 

Bitcoin Dominance Rate
BTCD Weekly Chart | Credit: Valdrin Tahiri/TradingView

Also, the wave count shows a completed five-wave increase. Finally, Ethereum is the largest altcoin, so periods in which it outperforms Bitcoin often lead to drops in BTCD.

What About the Rest of the Altcoin Market?

The Altcoin Market Cap broke out from a descending parallel channel on May 20 and continued increasing until June 5. However, it has fallen since. 

The downward movement culminated with a low of $980 billion on June 18 before bouncing (green icon). The bounce validated both the channel’s resistance trend line and the $1 trillion horizontal support area.

Even though the price trades inside support, the daily RSI and MACD are both trending downward. Also, the RSI is below 50 and the MACD is below 0.

So, while the bullish structure is intact, the price action and indicator readings do not align. A daily close below the channel’s resistance and the $1 trillion support area will suggest the trend is bearish.

Altcoin Market Cap Movement
ALTCAP Daily Chart | Credit: Valdrin Tahiri/TradingView

This mixed reading aligns with the wave count. The most likely count indicates that the altcoin market is in wave four of this five-wave upward movement.

Wave four often takes the shape of a symmetrical triangle. If this is the case, TOTALCAP has completed the bottom of the C sub-wave and will continue consolidating inside the triangle until the rest of the summer before an eventual breakout. 

This movement aligns with that of Bitcoin, which shows a similar pattern. 

Altcoin Market Cap Future Movement
ALTCAP 3-Day Chart | Credit: Valdrin Tahiri/TradingView

Alternatively, the bearish case suggests the Altcoin market cap is in the C wave of an A-B-C corrective structure.  While in the long-term this is still part of wave four, it can cause a deeper retracement toward $820 billion before the correction is over.

Ethereum to Outperform, Other Altcoins May Struggle

The Ethereum chart looks decisively bullish against Bitcoin, meaning that it can break out from its long-term resistance and increase considerably. However, the rest of the altcoin market is not so bullish and could consolidate until the end of the summer.

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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