Cryptocurrencies Greet Reality With Displeasure

You could see it coming for a few weeks if you paid attention. Bitcoin kept failing to make a new high and traders seemed to switch to Ethereum as the better choice. Crypto traders have exchanges where they love to trade amongst themselves from one coin to another. It looked as if a former favorite had given way to a new leader.

Ethereum went on to make a new high every day for awhile even as the other cryptos seemed to struggle. This was odd as, typically, they had all tended to move together, generally. After awhile you had the sense that $ETHUSD had been crowned the new champ, at least among the heavily traded well-known coins.

Sector weakness could be detected a month ago, however, by considering Bitcoin’s turn downward — and by taking note of the cryptocurrency related stocks. Instead of going up Riot Blockchain and Mara Digital Holdings began to head the other way, unexpectedly.

Then, there was the unfortunate post-IPO trading of Coinbase. Here’s daily price chart:

The initial public offering peaked early in the first hour of trading up around 420 and spent the rest of the day selling off. It’s been steadily downward since then as you can see by the direction of the red-dotted trendline connecting that peak with last week’s high. Coinbase gapped down today as indicated by the red circle filled with the blankness of no trades.

You could say that this IPO may have been priced too high. Obviously, such a statement is validated by the subsequent and quick price action. You could also argue the point that crypto traders did not feel all that confident about prospects. Informed, aware investors did not show up to buy in the after market. If you paid attention, you might begin to think about the sector with less enthusiasm.

Here’s the way Bitcoin’s daily chart looks now:

From a high of about 65,000 in mid-April to a low of about 30,000 in mid-May. The horizontal red-dotted lines indicate levels of support — where buyers had entered and taken over from sellers previously. You can see how bitcoin almost reached the late January levels before buyers showed up again. The trend is now unmistakably down with price below the Ichimoku cloud.

Here’s the Ethereum daily price chart:

The price peak of just a few days ago was up near 4400 and today’s low was just under 2200. The crypto completely re-traced the spectacular upward move from late April to mid-May. Enough buyers came in that the price remains in an uptrend but it’s not necessarily a good sign that it dipped below the cloud on the intensity of the earlier selling.

Here’s the Litecoin daily price chart:

From above 400 all the way down to about 140 all in just a 2 weeks time. Litecoin managed to bounce off of the lows like the other cryptos. That it failed to make it back above the cloud is probably a negative, at least for the immediate term.

Other cryptocurrencies exist and traded similarly today, but these remain the big 3 for now. Full disclosure: I do not have a position. Since the cryptos trade 24/7, prices may have changed somewhat by the time you read this.