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The momentum of the cryptocurrency market in August might still be going strong, according to analyst Benjamin Cowen. According to his basic scenario, altcoins will continue to rise against Bitcoin for the rest of the month, but when compared to Ethereum, the picture is far from consistent.
According to Cowen, altcoins will likely beat Bitcoin in August, but they will not be as strong as Ethereum until ETH gets close to its peak. It is hard to miss a massive and strong breakout on the ETH/USD daily chart, as the price surged past $4,700 on good volume and extended well above key moving averages.
Where exhaustion hits
Although the RSI readings are clearly in overbought territory, they also suggest that there may be market exhaustion. Bitcoin on the other hand has not broken out as strongly above the $121,000 range. Bitcoin's structure is more measured and the RSI is only slightly overbought, even though it has pushed above resistance. Cowen's argument that ETH is still a stronger asset in the short term and that most altcoins are suppressed against it is supported by this relative performance difference.
Cowen cautions that a significant BTC correction may occur in September. According to him, such a move would cause Ethereum to drop back below its ATH attempt, which would lead to a larger sell-off in altcoins. Given that September has historically been a weak month for cryptocurrencies, with either volatile rebounds or deeper pullbacks, this is consistent with historical seasonality.
Few weeks remain for altcoins
According to the roadmap, he believes altcoin traders might experience a few more weeks of advantageous movements in comparison to Bitcoin. But if Bitcoin does experience a significant correction in September, the ensuing market stress may push alternative currencies lower into late October or early November, possibly returning to their range lows prior to the next long run up.
A shift in sentiment in early autumn is possible, but August may still be a good time for selective altcoin plays, especially those that capitalize on the strength of the BTC pair. Since volatility is expected to stay high as ETH approaches its all-time high and Bitcoin tests the strength of its breakout, risk management is important for surviving the upcoming months.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team