Crypto is not for the faint-hearted, and the action of the last 10 days is a case in point …

Last Friday, October 25, just as some Bitcoin investors were throwing in the towel, the King of Crypto turned on a dime. In less than 20 hours, it surged from the $7,500 area to nearly $9,900. And currently, as of early Tuesday,it’s holding most of those gains, trading above $9.400.

These ups and downs in the market are visible to all. What many folk miss, however, is how different sectors of the crypto market lead or lag.

That’s critical; it can make the difference between getting whipsawed and profitably riding the trend.

Last week, for example, theWeiss 50 Crypto Index, which provides the broadest perspective on the market, was up 1.67%; and right now, it’s still roughly flat compared to 10 days ago.

fxsoriginal

But that belies tremendous volatility: On Thursday night, Oct. 24, the index was down roughly 14% on the week. By Friday night, those losses were largely erased. And currently, like Bitcoin,this index is holding most of its Friday gains.

Here’s the key: To better understand crypto market trends, it’s also important to pay close attention to divergent trends that our crypto price indexes bring to light in other segments of the market.

Our Weiss 50 ex-BTC Crypto Index, which excludes Bitcoin, was down 1.45% last week, a small divergence from the Weiss 50 Crypto Index.

fxsoriginal

More strikingly, the Weiss Small-Cap Index, which covers 73 small-cap cryptocurrencies,rose 6.03% and continued to maintain most of those gains Tuesday morning. That’s a much larger divergence.And as you can see from its chart, unlike the other Weiss indexes, it’s now trading well above last week’s highest levels.

fxsoriginal

It clearly signals some underlying strength that most investors don’t see.

Looking back further in time, however, we find that it’s Bitcoin’s divergence with larger altcoins thathas provided the most noteworthy clues about the market’s direction.

Specifically, since September, there has been a clear divergence between

  1. Most major altcoins, which held well above their September lows and

  2. Bitcoin, which last week broke down to new lows in itsmost recent correction.

This is relatively rare. But when it happens, it must not be ignored. It signals that the decline in Bitcoin, such as the one we saw early last week, may not be an accurate representation of the broader market trend. It means that Bitcoin investors should not be so hasty in throwing in the towel becausean important bottom may be in the making.

Indeed, something similar happened almost one year agoin December of 2018. Much as we witnessed last week, the larger altcoins displayed a stronger chart pattern. Theysignaled a bottom. And they went on to lead the entire market much higher in the spring of this year.

That critical divergence in late 2018 was a very good sign for crypto. A similar divergence today may turn out to be an equally good signfor the weeks ahead.

Weiss Ratings does not accept any form of compensation from creators, issuers or sponsors of cryptocurrencies. Nor are the Weiss Cryptocurrency Ratings intended to endorse or promote an investment in any specific cryptocurrency. Cryptocurrencies carry a high degree of risk. The SEC, CFTC and other regulators have expressed concerns with the volatility of the market and the actions of sponsors of specific cryptocurrencies. Be sure to review their official consumer alerts such as the public statement on cryptocurrencies by the SEC.

Cryptos feed

Latest Crypto News


Latest Crypto News & Analysis

Editors’ Picks

Dogecoin: DOGE on the verge of a 75% lift-off

Dogecoin price breaks out of a bull flag pattern after surging 20%. DOGE could surge 75% to $0.095 if it bounces from the 50% Fibonacci retracement level at $0.055. A bearish outcome could evolve if the price re-enters the “flag” and starts consolidation.

More Dogecoin News

Bitcoin price ready for another upswing as the Fed publishes new preconditions for a digital dollar

The Fed will be looking for stakeholder interest and buy-in to support the launch of a CBDC. The US is still a long way to develop a digital dollar because many structures are not yet in place.

More Bitcoin news

Solana: SOL could take a breather and pullback 30% after a 600% bull rally

SOL price has been on an uptrend since Jan 22 with only minor corrections. SOL was surprisingly unbothered during the market crash on Feb 22 and 23, as it dropped by a mere 13%.

More cryptocurrencies news

Ethereum: ETH building overhead pressure threatens losses to $1,200

Ethereum’s recovery stalls at $1,700, opening the door to the ongoing bearish pressure. The IOMAP reveals the presence of intense selling pressure ahead of Ether.

More Ethereum news

BEST CRYPTO BROKERS/EXCHANGES




Bitcoin Weekly Forecast: BTC journey to $100,000 might be easier than expected

This past week has been extremely beneficial for Bitcoin which jumped by 30% since Monday 8. Several positive announcements, especially Tesla purchasing $1.5 billion worth of the digital asset propelled the flagship cryptocurrency to new highs.

Read the weekly forecast

BTC

ETH

XRP