Crypto, bad signals with buying liquidations

For some time now, we’ve been seeing green on all charts, and the phenomenon is becoming more pronounced, especially on altcoins. Watch out for market sentiment, which has changed in recent days…

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A week of transition, buying liquidations piling up?

Still at the top of our range following the push to $35,000, we’ve been stuck on resistance for several days now. This is both a good sign, as we’re hammering away at something that could break, and a bad one, as buying liquidations are piling up.

However, it’s not this that puts me in doubt about the possible bullish continuation, but Bitcoin dominance. This is deflating, and reversal signals can be seen on virtually ALL altcoins, which is usually a premise before the end of a bull rally.

Many red flags!

The start of the altcoin season?

Let’s start with this dominance, which can be accentuated by using the ETH/BTC pair to directly compare the movement of Ethereum, the king of altcoins, against bitcoin.

Dominance thus seems to be marking a first local top, without continuing to rise, giving way to a rally in some altcoins, if not all. This rally will be guided by that of the ETH/BTC pair, which we’ll be keeping a close eye on, as a top in this pair will indicate that the rally is over. Why should this be the case? Quite simply because Ethereum is the first altcoin, the most capitalized which means that when the money that has arrived on Bitcoin starts to diversify, it starts with ETH and then moves on to the other assets. A bullish signal on this pair results in a bullish signal on all altcoins, and vice versa for a bearish signal.

The accumulation of buy liquidations

The problem with going up as we’re doing is that many liquidations are accumulating below the buy-side lows highlighted in the yellow circle on the chart above. These liquidations could trigger a bearish comeback with a “long squeeze”, leading to a cascade of buy-side liquidations and thus a rapid bearish return to the $33,000 minimum.

Other tools that can be used include Mobchart to highlight these liquidations:

This tool highlights the accumulation on each side, and we can see that the buying liquidation range is constantly growing (all the green lines under the price).

The beginning of FOMO

Since entering the range, FOMO has begun to make itself felt on altcoins, and this is to be expected when we see +10/+50/+100% on some of them. Green candles attract novices, who risk being trapped.

This phenomenon is highlighted by orderflow, which shows a severe problem. An increase in Open Interests, with funding moving into positive territory, highlighting the fact that buyers are increasingly leveraging altcoins. Rather bad news for a bullish continuation.

Conclusion

The first signs of an end to the rally are beginning to appear. We have seen this particularly with EGLD, which I mentioned in my article from last week, which was +50% yesterday. Other altcoins are in the same situation, which is not a good sign for the future.

However, the overall market seems to be turning around, with the $DXY representing the dollar turning around. Showing that market players are going back to buying. Perhaps a simple retracement on bitcoin would set the record straight before a fresh start targeting $40,000!

Time will tell. For this week, beware of the need to liquidate buyers before moving up. Have a good week, everyone, and see you next week!