Bitcoin (BTC) may not be as strong as the crypto community seems to believe. The recent ETF FOMO has certainly convinced many that the correction is over and Bitcoin (BTC) is ready to take off. However the fact remains that the BTC/USD chart above is anything but bullish. The price action looks weak and Bitcoin (BTC) is resisting a pullback but it cannot hold on for long. Wave trend seems to have run into a resistance on the daily chart for Bitcoin/US Dollar and the Inverse Fischer Transform Stochastic signals a big pullback in the near future.
While it may seem like a regular pullback with no extraordinary consequences, the reality is quite different. Ever since rumors of a Bitcoin (BTC) ETF, the altcoin rally has shown signs of weakness. These signs turned into reality when a Bitcoin (BTC) short squeeze, which many took for something to do with a Bitcoin (BTC) ETF set the price of Bitcoin (BTC) soaring at the expense of an altcoin bloodbath! Short term, some altcoins like Stellar (XLM) and Cardano (ADA) demonstrated strength. However, soon afterwards it became quite clear that investors are dumping their altcoins for Bitcoin (BTC). A tweet from Charlie Lee stating that cryptocurrency investors need to “buy a whole Bitcoin (BTC) first before buying any sh*tcoins” also seems to have had significant impact on how investors traded their altcoins to buy Bitcoin (BTC) in order to capitalize on an ETF rally.
The above chart for BTC/USD shows how the price is trading in an extremely overbought territory on the 4H timescale. The wave trend also shows that the price is likely to retrace sharply most likely around the weekend. So far, the trading activity at this point seems to comprise of whale bots and some Bitcoin (BTC) ETF optimists who believe that technical analysis simply does not work in this market and that Bitcoin (BTC) is ready to take off to the moon from here.
Bitcoin (BTC) is likely to fall back to lower levels from here but it is pertinent to note that the fall in altcoins will be more aggressive than it’s usually been. This is because fear of missing out on an ETF rally is very real which is why the price is taking so long to retrace. Eventually, some FUD over the weekend is likely to bring the price down but the fact remains that interest in Bitcoin (BTC) is very strong at the moment as investors want to capitalize on the ETF rally.
An altcoin rally seems unlikely at this point as investors are prepared to dump all their coins for Bitcoin (BTC). The above chart for Fundstrat Crypto Platform Index shows the combined performance of top platforms like Ethereum (ETH), EOS (EOS) and Cardano (ADA). As the price action indicates, altcoins are clearly in a downtrend and are likely to fall further before any signs of a recovery. This means that Bitcoin (BTC) will most likely suppress the upcoming altcoin rally and investors might have to wait a long time to make significant gains on their altcoin investments.