Bitcoin’s Breather Is Giving Altcoins Room to Run
• Ethereum (ETH, Tech/Adoption Grade “A”) has now posted 14 green candles in the last 15 days as it picked up major momentum.
• Chainlink (LINK) is starting to break out and is up around 80% from its late July lows.
• Uniswap (UNI)’s recent movement has been correlated to Bitcoin (BTC, Tech/Adoption Grade “A-”), and it is at the beginning stages of a recovery.
Ethereum has been on a wild ride over the last few weeks, bouncing off the low of $1,750 set on July 20 all the way up to $2,700 on Aug. 1 before settling in at just around $2,600 today.
That’s some pretty sweet price action for the No. 2 crypto.
But the best is yet to come, as Ethereum awaits the imminent release of the London Hard Fork containing EIP-1559. The upgrade is due at some point today.
Once it comes through, a portion of transaction fees on Ethereum will be burned, effectively reducing the issuance rate.
Decreasing supply plus increasing demand equals rising prices. The future for ETH in both the short and long term looks very bright.
Here’s ETH in U.S. dollar terms via Coinbase Global, Inc. (Nasdaq: COIN):
Chainlink appears to have started a “V”-shaped recovery from the lows set in late July. After crossing the important resistance level at $20, it has climbed up to $24 today and looks to be eyeing resistance near $25.
This price action is actually somewhat predictable if you look at Bitcoin.That is because Chainlink and Bitcoin have been highly correlated over the last year, so it’s not surprising that LINK followed BTC higher.
This chart showcases the correlation between these two assets:
You can see that the correlation between LINK and BTC has remained near 0.75 for most of 2021, and the prices of each asset have followed in the same direction.
Here’s LINK in U.S. dollar terms via Coinbase:
Another asset that has made a big recovery off its late July lows is Uniswap, up more than 50% from the low of $14.50 set on July 20.
It’s now facing resistance near the $23 level, although it should be stated that there isn’t too much resistance on the chart until $30.
UNI is another token loosely correlated to BTC. While they can move together, it isn’t out of question to see a divergence.
At times during 2021, BTC has led where UNI was stagnant, and other times UNI broke out without BTC following.
Looking at the recent data, BTC and UNI are more correlated now and are moving in the same general direction.
Here’s UNI in U.S. dollar terms via Coinbase:
Notable News, Notes and Tweets
• Venture capital is flowing into companies providing crypto solutions for financial advisers.
• Follow along and watch the first ETH transaction fees burned after the implementation of EIP-1559.
What’s Next
Ignore the recent Bitcoin breather. It’s a short-term stall. And not an unexpected one, either. We said before that a small pullback from Bitcoin could happen. After all, prices don’t go straight up in a healthy market.
The news to focus on is in the altcoin space. Now we’re beginning to see the broad market pick up and follow in Bitcoin’s footsteps.
It’s especially nice to see Chainlink moving upwards. We expect decentralized finance (DeFi) assets to be one of the biggest beneficiaries of this bull run, and LINK has tended to lead DeFi altcoins in the past.
The signals are everywhere, all showing evidence of an upcoming market boom. Things are getting very exciting once again in the crypto space.
If you’re thinking of expanding your exposure, you might want to do so before things really take off. Prices like we’re seeing now may not come back around for a while.
Best,
Alex
