Altcoin Weakness: Selectivity is Key
It’s becoming clear that most altcoins are underperforming at the moment. The market hasn't been offering optimal entry points, and we continue to see moves retraced back below initial impulses. Given this volatility, it’s crucial to be extremely selective about what you buy—and especially about how long you plan to hold. If you're holding lagging assets like Ethereum (ETH), well, you might already be in for a rough ride (if you haven’t noticed by now).
Let’s keep this brief, as this week could be pivotal for many cryptocurrencies in terms of market movements. I want to highlight the key reasons why ETH—and most altcoins in general—continue to lose ground to Bitcoin (BTC).
The Case of Ethereum: Why the Bearish Trend Persists
I’ve seen a lot of posts lately suggesting that ETH is on the verge of a full reversal and that “it’s a good entry” since November last year. While I don’t want to discredit ETH entirely, let’s be honest: It hasn’t done anything meaningful, and there’s been no indication that the downtrend will stop anytime soon. The question remains: Why buy an asset that’s been trending downward for months?
Let’s break down some of the key macro movements on ETH.
- Monthly Timeframe: The trend on the monthly chart has been firmly bearish. We’ve seen multiple expansion bars pushing the price lower, confirming new downside targets. What stands out is how the price continues to fall, even creating new modes that reinforce the bearish outlook.
- Current Downtrend Outlook: The current mode indicates that ETH could be in a downtrend until at least April 2025, with no signs of slowing down. The bearish momentum is persistent, and the market keeps pushing lower, even in pivotal areas where a reversal could theoretically occur.
- Expansion Bar Validation: Another concerning aspect is how the targets from expansion bars keep hitting within a three bar period, reinforcing the downward bias. This continues to signal that lower prices are more likely, even if we’re at a critical price point.
- The Only Positive?: One thing to note is that bar consolidations (modes) are getting smaller, from 14 down to 11. While this could suggest a potential slowdown in momentum, it’s still not enough to signal a reversal.
Given these factors, I would advise staying away from ETH until it shows clear signs of reversal—or until it hits its second target at 0.02733 and potentially beyond, around April 2025.
Broader Market Trends: Bitcoin's Continued Dominance
Now, let’s zoom out and look at the broader market. If we examine the Total2 (total market cap minus stablecoins) divided by Bitcoin's market cap, we see a clear trend: No altcoin season since the high in January 2022. There are two active downtrends at play:
- One set to expire in January 2025
- Another extending until April 2025
Given these downtrends, it’s unlikely that we’ll see a full-scale altcoin season anytime soon. However, we could potentially witness a bounce in altcoins against Bitcoin around April 2025—but don’t count on it being a reversal; it’s more likely to be a short-term relief rally.
Strategy Going Forward: Caution and Selectivity
The key takeaway here is that the market is still not inclined to take risks on altcoins. For now, I would recommend maintaining a 80/20 balance, with the majority of your portfolio in Bitcoin until altcoins show clear signs of a reversal.
A Glimmer of Opportunity: Solana and Betas
While the altcoin market remains uncertain, there is still potential in select projects, particularly Solana (SOL) and Solana Betas. These projects have been holding up relatively well and may provide some opportunities for trading in the short-to-medium term. So, for now, keep your focus on these while waiting for a broader altcoin market reversal.
