While it was very hard to trade and even harder on HODLers, the recent crypto correction seems healthy.
In our view, the reason behind the correction is fear of what Fed officials are rumored to say on the 60 minutes TV show this weekend. 60 minutes will be discussing Bitcoin (BTC). Specifically, they are featuring the individual who first bought pizza with Bitcoin (BTC) when Bitcoin (BTC) was worth less than a penny.
Despite the fear, charts of big coins still look ok.
Right now, Bitcoin (BTC) on BitMEX is holding at its 38% retracement at 7082 (Figure 1). 7080 is also a big Gann point.
Ethereum (ETH) is near its 38% retracement level near $234. If Ethereum (ETH) holds at $234 or bigger support at $221, that could be constructive (Figure 2).
We also noticed that Litecoin (LTC) stopped at $86.32. That level is the 50% retracement of its recent up move (Figure 3).
Ripple (XRP) did a deeper retracement but still managed to hold on a big Fibonacci support level. Ripple (XRP) held at the 62% retracement level at $0.36 (Figure 4).
Bottom Line: When markets are going up, big corrective moves can be healthy. Weak longs get washed out allowing smart money to add to positions. Corrections also allow new buyers who feel like they missed out to jump in.
In our view, any crypto-negative Fed statements over the weekend may already be priced in. Also, it’s not news that central banks are not crypto fans; and fading negative media stories is a classic contrarian tactic in a bull market. Net-net: The best strategy may be to buy the big dips until proven wrong.
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