Crypto markets are bracing for an eventful weekend, vacillating between optimism and uncertainty after a week of chaos and mixed signals. The CPI came in at 2.7% as expected — neutral, stable, unremarkable — but Thursday’s PPI came in at a surprising 0.4%, double what was expected.
Persistent producer price pressures are like termites – they don’t destroy a house overnight, but their presence eats away at the foundations of stability. Meanwhile, the ECB’s decision to increase liquidity by cutting interest rates by 0.25% is more of a stopgap measure than a panacea for the eurozone’s lackluster growth.
These developments played a role in the rise of the U.S. Dollar Index (DXY), which closed at 107 on Thursday. A resilient dollar could keep a tight rein on cryptocurrency inflows, cooling risk appetite. Of course, a weak dollar would boost crypto optimism, but that is not the case at the moment.
We were extremely greedy for too long, for nearly a month, until the brutal crash on Monday and Tuesday, when it was suddenly suppressed. The turning point is: it didn’t take long for extreme greed to resurface, and it rose back to 80 yesterday.
Two weeks ago, I explored whether Ethereum would be able to complete its “mission” to confirm an altcoin season. Spoiler alert: it did not. Instead, the rally failed and the altcoins were never fully confirmed.
Ethereum (ETH) Weekly Chart Highlights:
Ethereum ($ETH) remains in a critical consolidation pattern that began before Christmas last year at the top of the rectangle at $4,092, while strong support is located at the .618 Fibonacci Retracement level and the 50-week moving average around $3,021.
The recent weekly candlestick chart suggests possible fatigue and the possibility of a hanging man pattern, which is a strong reversal candlestick chart pattern.
Traders should watch the weekly close carefully to confirm or negate this signal. But for now, the resistance levels to watch are:
$4,092 (Rectangle top, key breakout area)
$6,050 (Rectangle breakout target and Fibonacci extension)
Key support:
$3,021 (Golden Pocket 0.618 Fibonacci + 50-week moving average + … rectangle midpoint)
Observations:
The recent rebound from $3,500 highlights buyer confidence, but the RSI divergence suggests that momentum is fading. A deeper pullback could retest the Fib levels between $3,226 (0.5 Fib) and $3,021 (0.618).
This week’s pullback from the year-to-date high of $4,092 to $3,511 was 14.5%, modest by crypto standards. However, a break below the golden pocket of $3,021 would signal a more significant shift in sentiment.
This magnificent rectangle continues to dominate Ethereum’s macro outlook, and by extension, the entire altcoin market. It’s a battleground not unlike what we saw in Total2, with resilience and rejection at key levels dictating the broader altcoin narrative. Let’s explore what Total2 reveals about the state of the altcoin market.
Total2: Altcoin market value recovery
3-Day Chart Insights:
Total2 paints a clear picture of resilience. After falling below $1.65 trillion near its 2021 all-time high, the altcoin market cap fell 17.5% but quickly rebounded to $1.53 trillion. Notably, the cup-and-handle breakout remains intact, with long-term targets extending to over $2 trillion.
Key observations:
The culture of buying on dips remains prevalent, as evidenced by the rapid rebound from recent lows. This resilience illustrates how traders continue to take advantage of opportunities during pullbacks.
Markets are not only about price action, but also about psychology. The speed of this rally highlights how quickly sentiment can shift in favor of altcoins once an attractive dip appears.
ETH to BTC: 12-hour structure
Ethereum’s performance against Bitcoin (ETH/BTC) reflects the broader altcoin momentum. Currently, ETH/BTC is at 0.0384, just below the top of the previous rectangle. While the head and shoulders pattern on the lower timeframes highlights the bearish risk, the market structure shift (higher lows) offers bullish possibilities.
Key levels to watch:
0.0403 (invalidates H&S, potential breakout level)
support:
0.0370 (key area for maintaining higher low structure)
0.0346 (last support level before falling to low of 0.032)
ETH/BTC’s relative strength is often a leading indicator of the health of the altcoin season. A breakout above 0.0403, especially accompanied by volume, is critical to confirming a narrative shift in altcoin dominance. However, reaching this mark alone is not enough.
A simultaneous close above $4,100 for both Ethereum and Total2, surpassing the 2021 breakout high, would be the ultimate confirmation. With all three conditions met, BTC Dominance (BTC.D) should also move lower, finally marking the true start of the altcoin season. If these conditions are not met, the market will be vulnerable to continued control by Bitcoin ($BTC).
Conclusion: Is the nightmare over?
Despite a volatile start to the week, altcoin fundamentals remain intact. Ethereum’s strength above $3,500 and Total2’s rapid recovery highlight the enthusiasm for buying on dips. However, the next leg of the move will largely depend on macro catalysts, especially CPI and the FOMC decision.
For now, traders should focus on key resistance levels like ETH’s $4,092 (plus the 0.04 barrier for ETH/BTC) and Total2’s $1.65T while monitoring volume and RSI for confirmation. A break above these levels could signal the return of altcoin season in full force.
