The crypto market is looking fairly depressed on Tuesday ahead of the Federal Reserve FOMC meeting. If a hawkish tone emerges out of the meeting this could send risk assets down. Altcoins are on the brink already.
M pattern forms above major support on Total2
Source: TradingView
It was only in mid-April that the altcoin market cap finally pushed through the descending trendline that had been displaying the decrease in altcoins’ value since January. However, the combined market capitalisation of all cryptocurrencies (excluding $BTC) is now at risk of rolling over and back down.
The above chart shows that the price is still holding above the major $1.01 horizontal support. However, an M pattern has formed, and this could send the price down through this support.
Altcoins have corrected 50% – trend is still up
Source: TradingView
The weekly chart for Total 2 (combined market cap of all cryptocurrencies (excluding $BTC)) shows just how far altcoins have corrected – almost 50% from top to bottom. That’s par for the course for a bull market.
The trend line has held, and a higher low was put in. What’s not to like here? If the current horizontal support holds, and even if it doesn’t, and the price dips down to the major trend line, there is still reason to be bullish.
The Stochastic RSI at the bottom of the chart has the indicators heading up nicely. A continued rally to at least the major resistance at $1.22 trillion looks the more likely scenario.
Investors flee to gold again, for now at least
Source: TradingView
A bit of a give-away for the depressed price action in crypto right now is the gold chart. As we head into Wednesday’s FOMC meeting, it looks as though investors have turned to the safe haven asset of gold for the time being. This has served to spike the gold price back towards its previous all-time high at $3,500.
Nevertheless, this is probably a short-term play, as gold buyers are becoming exhausted after their exertions in bringing the price up to this level. Macro indicators are suggesting that gold should come back down to earth over the next several weeks, before then perhaps resuming its uptrend.
In the intervening period, risk assets could continue to rally. How quickly that rally could resume depends, at least in the short term, on the utterances and hints that Jerome Powell makes in the upcoming FOMC meeting. The market will listen very closely.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
