• Bitcoin (BTC, Tech/Adoption Grade “A-”) retraced slightly over the last few days giving traders time to prepare for next leg.
• Solana (SOL) skyrocketed up to the high $70 range.
• Cardano (ADA, Tech/Adoption Grade “B-”) continues to outperform the market this week.
After hitting as high as $48,000 over the weekend, Bitcoin has since dropped down to retest its support at $45,000.
This is a good sign. Hopefully we’ve made clear by now that the market can’t go straight up all the time without any corrections. This is a healthy mid-bull cycle correction, one that will help Bitcoin prepare for a longer, more sustained run up in the near future.
The important thing to note is that this is a relatively small correction and that BTC is holding its support.
Here’s BTC in U.S. dollar terms via Coinbase Global Inc. (Nasdaq: COIN):
Taking the wind out of Bitcoin’s sails are the altcoins. Solana has been one of the best performing altcoins over the last week. It’s gone on an absolutely parabolic tear in that time, blasting from $41 all the way to $78 in just the last seven days!
SOL is gaining traction on the news of a growing decentralized application (dApp) ecosystem. It’s one of the most popular alternatives to the Ethereum (ETH, Tech/Adoption Grade “A”) ecosystem at this time, and if it can continue with this momentum, the price of SOL is likely to continue higher.
SOL is now trading well above its previous all-time high, so it is in full-on price discovery mode. If the last few days are any indication, then the $100 mark is very much in play here.
Here’s SOL in U.S. dollar terms via Coinbase:
After reaching the $2.20 mark, ADA dropped all the way down to $1.90 as it restated support levels yesterday. But again, this is a normal, bull cycle test of support. Today, Cardano showed major strength as it recovered all the way to $2.12, continuing its run of outperforming Bitcoin ... and most of the market.
We have seen surprising resilience in ADA during this most recent rally, and traders are becoming more confident in this asset. Perhaps that has to do with the upcoming release of smart contracts to the Cardano platform. Or perhaps there are other factors at play.
Either way, ADA has enjoyed a very nice ride over the last few weeks.
As we close out the month of August and enter September, look for ADA to settle in to a price range as traders wait to see if the smart contract release is successful.
If the launch goes according to plan, Cardano could continue to rise, but if the launch is less than advertised, ADA could suffer.
Here’s ADA in U.S. dollar terms via Coinbase:
Notable News, Notes and Tweets
• Bloomberg offers up more background on the wild story of the largest cryptocurrency hack of all time, after which the white hat hacker returned that vast majority of his stolen goods.
What’s Next
As we stated last week, the possibility of a small price pullback was high considering how rapidly the market had been rising.
These are to be expected and welcome during bull runs. They allow investors to reshuffle their portfolios and offer new buying opportunities for those who aren’t fully invested.
That being said, we don’t expect this correction to last very long; the overall bull trend should pick back up shortly.
Currently, both Bitcoin and Ethereum are in a no man’s land — without much volume or past trading data to guide us — between the current levels and recent all-time highs.
Just take a look at the volume profile chart for Bitcoin:
Above our current level, there are only two real groupings of volume: the $47,000-$51,000 level, and then a bit more volume near the $54,000-$58,000 level.
But when you compare the volume bars in those two areas to what we saw in the $30,000-$40,000 range, it shows just how little data we have to look at in comparison.
So, it isn’t out of the question for price action to be shaky as we trade between these volume areas, at least until we finally break back above all-time highs. After that, we can expect the market to look very much like it did in Q1 2021.
But there are still many altcoins that are close to or have surpassed their previous all-time highs ... so there are plenty of trading opportunities to be had.
Stay tuned to hear more about those exciting altcoins as always.
Best,
Alex
