Crypto: Is Another Big Crash Upon Us?
Volatility is picking up again, and this is occurring exactly during the volatility window that we previously forecasted. Crypto is not escaping this volatility. However, for now, that really big drop is not happening. That is not to say that crypto can’t accelerate the downtrend. What we are saying is that there is still plenty of support to avoid another big crash in crypto, similar to the one seen in May through June of last year.
The one crypto chart that illustrates our point of view is the Ethereum chart below. We discussed the same ETH chart two weeks ago. Some points we made are:
- The 1549-1658 area has lots of resistance.
- This is Ethereum's third attempt to clear this area since last summer.
- We suspect that the fourth attempt will come with a breakout, but only in four to six weeks from now.
- Everything will depend on how low ETH falls. If support at 1336 holds in March, we are convinced that ETH will clear 1658 no later than April of this year.
Interestingly, nothing really has changed in our readings since then. The most important factor to watch, as volatility continues picking up, is discussed in the fourth bullet point; everything will depend on how low ETH falls.
We can be more precise by pointing out that it is the 1235-1336 area that should provide support in order to confirm a ‘buy the dip’ opportunity. We always think in terms of three- to five-day closing prices.
There would be no crash in the case of the 1235-1336 area holding strong. For now, it looks like this area is going to provide strong support. But, as always, the market will have the last word. We will have an answer from the market in the next 10 calendar days or so.
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