by Chad Steinglass

BTC & ETH markets

BTC and ETH are both in consolidation markets after reaching and then being rejected from new all-time highs. For many, none of this is a surprise, it was never a matter of if, but only when. The run starting October 1st, coming out of the month-long consolidation in September, was nothing less than a rocket ship move. While parabolic moves do happen, they can also be followed by catastrophic selloffs, and for any bull run to rest on solid ground, it is important for it to be tested along the way.

Reality check phase

We’re currently in the middle of one of those tests. While the market does feel bearish simply because it seems like an anticlimactic letdown immediately after reaching new highs, I think that we are really just in a reality check phase, and how prices perform over the next one to 3 weeks will offer either confirmation of the bull market or kick us back into a no man’s land of uncertainty.

What the charts warn

After the quick pull back that started towards the end of last week, BTC has found strong support right around the 60k level and ETH has been holding strong near or above 4k. These are both very high levels for these assets, and so by no means is the outlook dire. But watching the charts does give some warnings: though support has held, rallies have been sold quickly and optimism bludgeoned and have brought prices right back to that support level.

No rush for the exits

During this pull back, BTC dominance has been on decline (after rocketing higher all of October so far). Strength is being sold, but there is no rush for the exits. And while buyers haven’t been aggressive, they also have not gone away, with the support yet to flinch each time it has been tested in the past week.

I will be watching anxiously over the next few days, however. If the support wall holds, I expect prices to drift back above 63k by the end of the month. If that happens, I expect sellers to evaporate quickly, and a rush of new money entering to propel us higher to start November.

The narrative of the bull market

But if the wall of support around the 60k level can’t hold through the end of this week, that could shake the confidence of long holders and could cause a quick selloff into the 53-55k level. While that doesn’t sound too bad as far as price corrections are concerned, it could potentially derail the narrative of the expected strong bull market into the end of the year, and could put us in a prolonged period of chop which might take quite a while to emerge from.

Precarious position, brief consolidation

It seems like markets are always on a precipice, just a slight push from tipping in one way or the other. But that is doubly so for crypto markets right now as we play out the final days of October. It’s a precarious position, but not a bad one. And if we do hold through the end of the month and then start to move higher, the next leg of the bull market will be built on that much stronger foundation for having gone through this brief consolidation.

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