Big moves today! Great moves today! Bitcoin, Ethereum, and Litecoin burst out of a consolidation are lasting over 9 days. It’s great to see the majors gain value! Buy why do altcoins lose value?

Bitcoin

5318btc

A beautiful breakout of the triangle/wedge. Textbook, actually. It also forms a double top, so we could see some selling back down to the top of the trendline before finding support. But there is considerable space between both of the 1/5 angles (thin blue diagonal lines). And the $10,000 value area is not an area of significant support or resistance in past price action, it’s only a significant psychological level.

Ethereum

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At one point today Ethereum was up over 10%. It’s breakout strength was mainly due to two ‘springs’: consolidation below a 2×1 Gann angle along with consolidation inside an arc. Those two components almost always yield explosive moves. Just like Bitcoin’s chart, Ethereum has significant free space in front of it, with the only real, nearterm, resistance area at the $850 value area.

Litecoin

5318ltc

Litecoin is in a little more of a touchy and iffy position. It has a massive bid up, but look where it found resistance: right against a Gann arc. This is a dangerous zone on the 4 hour and 1 hour charts. The daily , though, looks very good for continued moves higher

Why Do altcoins lose value when Bitcoin gains strength?

One of the most vexing and frustrating things new crypto traders find is that while Bitcoin and Ethereum rising is good for the entire market, their positions seem to lose value. For example, the ADABTC pair is down over 4$, but the ADAUSD pair is mostly flat. What gives?

5318adadn 5318adaup

 

Here’s the thing we have to understand:

  1. Altcoins derive their value from a base currency, generally that is Bitcoin.
  2. Bitcoin derives it’s value from another base currency, generally the US dollar.
  3. Altcoins  have a rate (in this case a pair, like ADABTC) that reflects it’s performance against Bitcoin.
  4. Basically, Altcoin Value equals Bitcoin Value which equals the US dollar amount.
  5. If you understand how Forex pairs work, then you understand how this works.

So while the ADA/BTC pair shows ADA under performing against Bitcoin, ADA’s value still increases because it’s value is determined by Bitcoin. 

Tradingview has a good amount of charts that show what an altcoin’s US dollar value is compared to it’s various pairs. It’s a good idea to watch your specific coins, whether they be ETH or BTC pairs, and compare their performance against the value of the US dollar. As long as the US dollar value has not dropped a whole bunch, you’re still sitting nicely.