This weekend’s shakeout of altcoin traders and investors seemed necessary.
The sharp decline witnessed by most altcoins likely stemmed from heightened tensions in the Middle East. However, the crypto market is showing signs of rebounding, and barring any unforeseen events, a significant upward movement could be in the cards.
In the midst of Recovery
The crypto market rally appears to be gaining momentum. Bitcoin saw a notable 17.5% reversal over the weekend, briefly dipping below $60,000, but Sunday and Monday have brought about the start of a recovery for both bitcoin and the broader cryptocurrency market.
A Challenging Weekend
For altcoins, a clearer picture is emerging. Friday and Saturday presented a grim outlook. Escalating tensions in the Middle East exerted pressure on the crypto market, particularly on altcoins, which tend to be the riskiest assets.
From the opening candle on Friday, the altcoin market cap plummeted by as much as 14.4%, followed by a further 16% drop on Saturday. However, signs of recovery emerged later on Saturday as the significant downturn was met with buying pressure, leaving a long wick beneath.
Total Market Cap Trend Takes a Hit
The impact of this movement is evident in the Total 3 chart, which represents the combined market capitalization of all altcoins excluding Bitcoin and Ethereum. The trendline was severely disrupted by the dip, yet there’s a notable recovery as the altcoin market cap approaches the trendline once again.
Potential Bearish Confirmation?
Some may interpret this as a bearish development, as the price encounters strong resistance that previously served as support. This could potentially confirm and extend the downward trend unless the price manages to reclaim the trendline and convert resistance back into support.
Bullish Cup and Handle Formation
Taking a broader view on the weekly timeframe, the outlook appears more optimistic. Support around $645 billion has held firm, and the price has returned above the trendline. From a bullish standpoint, the next objective would be to revisit the $786 billion resistance level. Additionally, a significant bullish signal is the formation of a large cup and handle pattern. While the cup has already formed, the recent dip has initiated the formation of the handle. If the price reaches $786 billion and breaks through the resistance, the cup and handle pattern could unfold, potentially leading to a price target of $1.285 trillion. Hold on tight!
