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Crypto market cap may be at the beginning stages of bottoming out

After reaching 2.05T market cap from its all-time-high of 4.27T – more than half of its ATH – the crypto markets may be beginning to bottom out.

This coincides with its behaviour in 2022, where the crypto market cap fell from 3T to ~750B and began drifting sideways.

A clear technical indication for this setup to reoccur is as follows:

  • Candle closes outside of the Weekly 50 EMA band (1sd).
  • Stochastic RSI crossing up.
Chart

Today, we’re getting a similar setup. The candles are outside of the bands, and the weekly stochastic RSI is in the process of crossing up – should we end the week positively.

Key message here is: Crypto Market Cap is beginning to base out. Bitcoin may go sideways or even drift lower, but farther targets like 30K or 16K as the low looks less probable now.

Technical breakdown of TOTAL chart

The TOTAL chart represents the crypto market cap in USD value. And looking back, you’ll actually see that weekly made Fair Value Gaps are well respected (meaning that price tends to pivot from there).

For a true recovery to be made, we need to reclaim the 2.65T – 2.87T zone, otherwise it remains a cap. Before that however, we have 2.42T – 2.52T as a potential resistance zone for another drop lower.

We also need to be cognisant of how this chart translates over to Bitcoin… And taking a look there, a major resistance zone is panning out at ~74K, where a previous high and a FVG aligns.

TLDR; TOTAL and BTCUSD remains capped under 2.42T and 74K until proven otherwise. A reversal signal building here implies more of a sideways drift (potentially even lower) before true recovery.

Closer look at BTC/USD

Chart

The BTC/USD 1W Chart above is not truly indicative of the price action levels to watch.

On closer inspection (on this zoomed in chart), we can see that Bitcoin is currently cooling off on an anchored vWAP from 2022, at 64K.

However, the bear flag scenario specifies that Bitcoin is capable of reaching 53K, but should we drop even lower to previous lows, it’d be at approximately 49.7K.

Historically, Bitcoin has always broken below its anchored vWAP from the prior cycle low (See: highlighted red circles).

A consolidation usually follows before a major rally reversal into a bull run. This behaviour makes 50K a worthy area to watch should we descend lower.

Tertiary supporting factor

Chart

Last but not least, the USDT Dominance chart (USDT.D) has tapped into a major resistance zone.

The stochastic RSI is also forming potential double top, a bearish reversal signal.

Since USDT and Bitcoin/Crypto Market Cap are inversely correlated, this could mean that relief is near for the crypto market. But, this is by no means a call for an immediate reversal.

The sideways narrative still takes precedence here – especially with all the ongoing geopolitical tensions which will add volatility into Crypto’s already volatile nature.

Author

Zorrays Junaid

Zorrays Junaid

Alchemy Markets

Zorrays Junaid has extensive combined experience in the financial markets as a portfolio manager and trading coach. More recently, he is an Analyst with Alchemy Markets, and has contributed to DailyFX and Elliott Wave Forecast in the past.

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