Issue 8 – Will Stocks Crash Altseason?

April 16, 2021


Many woke up to a sea of red today.

BTC was down 5% from Thursday’s close, and ETH had slid 8% overnight.

And while many of us would rather not admit it, a pullback isn’t all that surprising given the recent gains.

So far in April, VET is up 135%, and the last significant pullback (over 20%) occurred 480% lower.

And it isn’t the only one.

Even ETH was up 35% in April as of Thursday’s high. That’s significant for the largest altcoin by market cap.

But has the pullback runs its course, or is there more to come?

In today’s newsletter, I’ll share with you the bullish and bearish scenarios I’m monitoring.

Let’s get it!


S&P 500

It may seem strange for me to start with the S&P 500 stock index.

However, contrary to what some think, US equities and cryptos are related.

All one has to do is match the last few pullbacks from the S&P to Bitcoin.

You’ll quickly see that every 20%+ correction this year from Bitcoin was matched by a 5-10% pullback from the S&P.

That isn’t coincidental.

Looking at the S&P today, several factors point to a potential local top.

The daily RSI is over 70, which has only happened twice since the March 2020 crash. Both times triggered a 5-10% correction.

There’s also heavy bearish divergence on the intraday charts.

Lastly, the 1-hour ascending channel and broadening wedge that’s been in place all year intersect just below 4,200.

If the S&P breaks below channel support near 4,150 next week, it could be the start of a more significant rotation lower.

That alone could weigh on Bitcoin and the rest of the crypto market.

Alternatively, a daily close above the 4,200 area would negate the bearish outlook.

S&P 500 – 1-hour time frame

BTCUSDT

Bitcoin has been all over the place since late February.

While still churning higher and carving a new all-time high just this week, the market looks relatively indecisive.

BTCUSDT also broke below a short-term trend line overnight.

It’s unclear if that’s a meaningful development as of now.

The $60,000 area is support, with resistance coming in near $63,800 following last night’s selloff.

BTCUSDT – 4-hour time frame

ETHUSDT

ETHUSDT carved a new all-time high on Thursday above $2,500.

It even closed the day above the level.

However, it was short-lived following an overnight selloff.

ETHUSDT is trading below $2,500 at the time of writing and needs to recover that level on a daily closing basis to stay constructive.

As I mentioned on Twitter today, the area between $2,320 and $2,250 is providing support.

A close below that area would signal weakness and open the door to $2,200, perhaps even $2,000 and $1,930.

Unless Ethereum can reclaim $2,500 on a daily closing basis, the market looks fragile.

ETHUSDT – 4-hour time frame

VETUSDT

VET has had a monster week.

In fact, it’s been on a tear all month.

Just 13 days ago, VETUSDT was $0.08.

Fast forward to today, and it’s testing $0.21.

That’s a 150% rally in 13 days, which is mind-bending for a coin that was once joked about as a stable coin.

As for the current price action, it comes down to where this week closes.

The channel resistance near $0.18 has held for the last couple of days, so we’ll have to wait and see where today closes.

If VET can clear $0.18, we could see the area flip to support.

However, I’d prefer to also see a weekly close above that area for confirmation.

As for resistance, it’s near impossible to say as VET is in price discovery.

VETUSDT – daily time frame

ADAUSDT

Cardano continues to consolidate within an ascending triangle.

That’s been the case since February.

Bulls tried to clear resistance near $1.50 multiple times this week but failed.

It’s going to take a daily close above that to confirm the breakout and open the door to higher prices.

Furthermore, ADAUSDT needs to climb back above the short-term trend line near $1.47.

The alternate scenario is one that not many will want to hear.

There is still a chance of a short-term bearish scenario where ADAUSDT breaks the bottom of this triangle and moves toward $0.70 to $0.80.

Cardano formed two similar patterns in August of last year and May of 2019.

It broke lower both times.

The 2019 example isn’t as telling as cryptos weren’t in a full-blown bull market, and one could argue the same about the 2020 ascending triangle.

Nonetheless, I have to respect both scenarios while ADAUSDT is below $1.50.

That said, I think $10+ is achievable for ADA over the next six months.

ADAUSDT – 4-hour time frame

LINKUSDT

LINK has been trading in an ascending channel since late last year.

The market is testing the top of that channel near $44.

Whether or not LINKUSDT can clear that area is yet to be seen.

If it can’t, and we do see a rotation lower from these markets, I’d keep a close eye on $35, followed by $25.

Both areas have been key over the last few months.

Resistance above $44 is harder to identify, but I have to assume $50 will attract some sellers, followed by $55 and $60.

LINKUSDT – daily time frame

Justin Bennett

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About the Author

I'm Justin Bennett, a currency trader turned crypto enthusiast. My journey started with stocks in 2002. After limited success, I transitioned to currencies in 2007, which later became a full time trading gig. The journey continued, and in 2020, I committed to learning about cryptocurrencies. It was love at first sight. Cryptocademy.com is the culmination of my love for cryptocurrencies, my passion for financial markets, and desire to learn and teach.

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