Mixed Signals in the Crypto Landscape
The crypto market braces for an eventful weekend, teetering between optimism and uncertainty after a whirlwind week of mixed signals. CPI data hit the 2.7% mark as expected—neutral, stable, unexciting—but Thursday’s PPI at 0.4% raised eyebrows, doubling the forecast.
Persistent producer price pressures are like termites—they won’t collapse the house overnight, but their presence gnaws away at the foundations of stability. Meanwhile, the European Central Bank decided to add a splash of liquidity with a 0.25% rate cut, a move that’s more band-aid than cure-all for the eurozone’s sluggish growth.
These developments played their part in lifting the U.S. Dollar Index (DXY), which closed strong at 107 on Thursday. A resilient dollar might keep crypto inflows on a tight leash, cooling the risk-on narrative. Sure, a weak dollar boosts crypto optimism, but this isn’t that story—not yet.
Let’s not sugarcoat it—the extreme greed lingered far too long, stretching nearly a month before being smacked down abruptly in Monday and Tuesday’s brutal crashes. But here’s the twist: extreme greed didn’t take long to resurface, climbing back to 80 yesterday. Today’s reading (Friday, December 13) shows this:
If this all sounds familiar, it should. Two weeks ago, I explored in my article, ‘Altcoin Season on the Horizon?’, whether Ethereum could complete its “tasks” to confirm an altseason. Spoiler alert: it didn’t. Instead, the rally fizzled, and altcoins never got their full confirmation. Let’s go back to some of these charts to check on our main hero—or villain—in this latest altcoin debacle.
Ethereum (ETH): Weekly Insight
Weekly Chart Highlights:
Ethereum ($ETH) remains in a critical consolidation pattern starting before Christmas last year within the rectangle top at $4,092, while strong supporting confluences align around $3,021 at the 0.618 Fibonacci retracement and the 50-week MA.
The recent weekly candle hints at potential exhaustion, marked by a possible hanging man pattern. Better not, still time. It’s a strong reversal candle pattern. Nie fajnie. No bueno.
Traders should watch the weekly close carefully to confirm or invalidate this signal. But for now, to keep an eye on:
Resistance Levels:
$4,092 (rectangle top, critical breakout zone)
$6,050 (rectangle breakout target and Fib extension)
Key Support:
$3,021 (golden pocket 0.618 Fibonacci + 50-week MA + … the rectangle mid-point )
Observations:
The recent rally from $3,500 highlights buyer confidence, but RSI divergence suggests weakening momentum. A deeper correction could retest fib levels between $3,226 (0.5 Fib) and $3,021 (0.618). This week’s correction of 14.5% from the yearly high of $4,092 to $3,511 was shallow by crypto standards. However, dropping below the golden pocket at $3,021 would indicate a much more significant shift in market sentiment.
This majestic rectangle continues to dominate Ethereum’s macro outlook and, by extension, casts its influence over the entire altcoin market. It’s a battleground not unlike what we see in Total2, where resilience and rejection at key levels define the broader altcoin narrative. Let’s explore what Total2 reveals about the state of the altcoin market.
Total2: Altcoin Market Cap Recovery
3-Day Chart Insights:
Total2 paints a clear picture of resilience. Following its $1.65T rejection near the 2021 ATH, the altcoin market cap dropped 17.5% but rapidly rebounded to $1.53T. Notably, the cup-and-handle breakout remains intact, with a long-term target extending above $2T.
Key Observations:
Dip-buying culture is alive and well, as evidenced by the rapid rebound from recent lows. The resilience tells the story of how traders continue to seize opportunities during pullbacks.
Markets are as much about psychology as they are about price action. The velocity of this rebound underscores how swiftly sentiment can pivot, flipping bullish for altcoins the moment a dip looks enticing.
ETH to BTC: 12-Hour Structure
Ethereum’s performance against Bitcoin (ETH/BTC) reflects broader altcoin momentum. Currently, ETH/BTC sits at 0.0384, just below the prior rectangle’s top. While the head-and-shoulders pattern on lower timeframes highlights bearish risks, the market structure shift (higher low) offers a bullish possibility.
Key Levels to Watch:
Resistance:
0.0403 (invalidate H&S, potential breakout level)
Support:
0.0370 (critical zone to maintain higher low structure)
0.0346 (final support before breakdown towards the lows at 0.032)
ETH/BTC’s relative strength is often a leading indicator of altseason’s health. A breakout above 0.0403, particularly if accompanied by volume, is crucial to confirm the narrative shift towards altcoin dominance. However, meeting this target alone won’t be enough. A simultaneous close above $4,100 for Ethereum and Total2 surpassing the 2021 blow-off top levels will be the ultimate confirmation. With all three conditions fulfilled, BTC dominance (BTC.D) should also trend lower, finally signaling the true start of an altcoin season. Failure to align these conditions would leave the market vulnerable to Bitcoin’s ($BTC) continued grip.
Conclusion: Is the Nightmare Over?
Despite a turbulent start to the week, altcoin fundamentals remain intact. Ethereum’s resilience above $3,500 and the rapid recovery in Total2 highlight renewed buy-the-dip enthusiasm. However, the next leg depends heavily on macro catalysts, particularly CPI and the FOMC decision.
For now, traders should focus on critical resistance levels like $4,092 for ETH (plus 0.04 road-block on eth/btc) and $1.65T for Total2, while monitoring volume and RSI for confirmation. A breakout above these levels could mark the return of a full-fledged altcoin season.Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
