Over the past few weeks, I've gotten one of my favorite bottoming signals: people who never talk about stocks or crypto texting me or calling me asking if Ethereum and Bitcoin are dead. Let's pull up some charts to see if they are right.
Looking at weekly charts, we can see that RSI has reached oversold levels on both Bitcoin and Ethereum that have not been seen in years.
Bitcoin even fell below its' lower Bollinger Band on its' weekly chart, which is another sign that selling might be exhausted.
On a monthly chart, there are two things that caught my eye. First, I like the fact that Bitcoin and Ethereum found support at the major support levels of $1,000 and $20,000 which were both major resistance levels in the prior cycle. It's a good sign to see prior resistance act as support. In addition, we have see some heavy volume selling come in over the past two months. This might be capitulation as anyone who wants to sell has most likely done so already and those who are still holding or "hodling" are likely to continue to hold no matter what.
So where does all this leave us? I think it is very well possible that both Ethereum and Bitcoin have put in an important low. However, the bottoming process will most likely take months, and BTC and ETH will need an extended period of time to reach new all-time highs. When we look at the bottoming process from 2018 to 2020, we can see there were many months of sideways action. I believe this is likely to happen again until another strong uptrend begins somewhere down the line. I personally own some Bitcoin and Ethereum in my long-term account, but am keeping the majority of my funds in cash until we get a strong uptrend like we did in 2020. To learn more about Bitcoin and Ethereum, check out these short YouTube videos I made last month.
To learn more about swing trading strategies, stock market trading, and how to trade cryptocurrencies, visit my course page.
Full Disclosure: I currently own Bitcoin and Ethereum.
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