Hi guys and gals, something I have been noticing and sensing.
This latest rally has benefited few of the staple coins besides bitcoin. There have been some newer coins to have good runs, but largely this has been bitcoin's run.
To my understanding, if bitcoin continues to soar but other coins are simply unable to keep up... to me this strikes very much as an aggressive top. It's very strange if BTC soars to 5k but ETH cannot reach $350. We all know that BTC, while the big guy in town, is not somehow light-years better than the rest of the players in the market place. What BTC does have going for it is a lot of hype by internet gurus who predict Bitcoin 13k by a mysterious computer program they run. Never trust such commentary.
When a market tops and never returns, you always have predictors saying the market will continue to soar higher. In the lows of a bear market, you always have predictions saying it will go lower. Predicting an existing trend is almost useless. Just draw trend lines and trade those if you want to trade trends, far more reliable than gurus predicting a never-ending future of BTC price increases.
Speaking of trends, today, we hit my first target for a possible BTC pull-back in the green circle. The market seems to be responding to this level.
The red circle highlights the next fib level at 4,800. I favor this 4,800 level with a brief test above it to 5k. At such a juncture, I would certainly take some off the table, probably 50% of my holdings, since a retest to 4k would be very easy at that point. A possible retest to $3,140 could occur as well.
The thing that concerns me the most about this rally is that the other coins are largely not following Bitcoin. That would be fine if those other coins were going to catch up after Bitcoin was done soaring higher. This would make sense. Yet if that does not happen and we have bitcoin sitting on a huge rally far ahead of and beyond all other coins, we have to wonder if the market is signalling something to us, such as a drastic pull back in bitcoin. Later this year, we have an event which can cause a scare pull-back in bitcoin.
August 23, is the Segwit activation. Pretty much I think all people expect this to go smooth.
The next major event for Bitcoin is the Segwit2X hard fork. This is where miners increase the blocksize limit to 2MB. This one could be controversial because Segwit supporters who did not support a blocksize increase may decide to back out of the agreement at this point and break their prior promise.
This also has the potential of creating a 3rd bitcoin. If it does create a third bitcoin, I believe while this temporarily may be a decent trade, long-term this may highlight the silly outcomes of Nakimoto Consensus. What a logistical nightmare for anyone to support bitcoin as an exchange. Every time it forks to upgrade its protocol, expect a new coin to be made.
Anti-fork coins like Tezos and EOS are the future, because by design they are not made to work on hard fork consensus, but rather internalize governance on the blockchain itself. In the future, exchanges might demand this from bitcoin, because the scaling debate is not finished at 2MB. Meaning, we have the opportunity for 4th, 5th and 6th bitcoin hard fork alt-coins.
Another possible outcome from a Segwit2X betrayal is that some mining pools have pledged to switch to Bitcoin Cash if they are betrayed. One such pool owns bitcoin.com. Meaning, Bitcoin Cash could gain heftier marketing support as a bitcoin alternative and competitor if the Segwit2X event does not happen for bitcoin.