With bitcoin (BTC) price rally showing signs of exhaustion above $8,000, investors have begun diverting money into relatively cheap alternative cryptocurrencies (altcoins).
The world’s leading cryptocurrency by market value jumped to a 10-month high of $8,335 in the early European trading hours on Tuesday. The rally, however, stalled with BTC witnessing a minor pullback to lows near $7,600 in the U.S. trading hours.
As of writing, BTC has returned to levels just below $8,000, representing little change on the day.
While bitcoin is showing signs of bullish exhaustion, the altcoin market is a sea of green with prominent coins like ether – the second largest cryptocurrency by market value – rising to $235 on Bitstamp, its highest level since Oct. 1, 2018.
At time of writing, ether is trading at $232 – up 12 percent on the day – having witnessed a golden crossover, a bullish cross of the 50-day and 200-day moving averages (MAs) last month.
Even ether’s strong performance, however, is being overshadowed by XRP, which is the best performing top cryptocurrency of the last 24 hours.
The price of a single XRP jumped to $0.45 earlier today, the highest level since Dec. 24, confirming a double bottom breakout (a bearish-to-bullish trend change) on the three-day chart. As a result, the third largest cryptocurrency could rise further toward $0.50 in the near-term.
While major altcoins have found some love, the flow of money is also heading towards lesser-known cryptocurrencies, as seen in the chart below.
The surge in altcoins has pushed their total market capitalization to $95.65 billion – a level last seen on Nov. 8, 2018.
The lower highs on both the relative strength index (RSI) and the Chaikin money flow (CMF) on the 4-hour chart (above left) indicate that bullish momentum for BTC has weakened. The cryptocurrency could see a price pullback, possibly to the ascending trendline support, currently at $7,300.
The case for a deeper correction would strengthen if the 50-hour moving average (MA) support is breached. That average, currently at $7,872, has reversed pullbacks twice in the last 24 hours.
The case for a rally to $8,500 and higher would strengthen if the hourly chart RSI (above right) violates the falling trendline, representing bearish divergence. The bulls, however, may have a tough time holding onto gains above $8,500 (July 2018 high), as the daily RSI reporting extreme overbought conditions.
Ether’s rise to seven-month highs validates the ascending triangle breakout (bearish-to-bullish trend change) signaled witnessed in the three-days to May 12 (previous 3-day candle).
The cryptocurrency has violated the 16-month-long falling trendline, while the 5- and 10-candle moving averages (MAs) are trending north, indicating a bullish setup.
Prices, therefore, could challenge the immediate resistance at $256 in the near-term. The bullish outlook would be invalidated only if prices fall back below the high of $187 registered in the three days to April 10.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; technical charts by Trading View
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