·         First signs of rotating capital observed.

·         Bitcoin outperforming entire market.

Bitcoin breaches $5500

Bitcoin breaks and holds above $5500.

After breaking through a major triangle that lasted nearly the entire month of April, Bitcoin broke out of that pattern on April 19th. It then traded sideways before resting the breakout zone on April 21st. From that point, Bitcoin has had predictably persistent moves higher. The price level of $5500 has been the obvious and predicted area that Bitcoin needed to test next. It has so far held that price level and been able to stave off any short sellers. Something that is contributing to the strength of the move and the ability to hold at $5500 is the fact that Bitcoin broke above the 0.618 Fibonacci arc. That should act as the strongest near term support level. We can also predict the pattern and direction Bitcoin will move if it holds above that arc – price should follow the contour of the arc. If that does occur, then we will observe a very flat and tight trading range until around May 5th, 2019. Bitcoin will probably trade against both the 0.618 Fibonacci arc and the 2/8th inner harmonic at 5671.85. A breakout and resumption higher should occur around May 6th to May 8th.

Altcoins suffer as Bitcoin leads the market

                While Bitcoin has outperformed the entire cryptocurrency market today, altcoins have suffered. Cardano (ADA) has dropped over -9% against Bitcoin and as much as -4.5% against the US Dollar. ICON (ICX) has likewise seen big drops, -7.86% against Bitcoin and -11% against the US Dollar. Polymath (POLY) has actually generated significantly lower historical lows since Bitcoin’s move up, with Polymath dropping over -8% against Bitcoin. There have been relatively few exceptions to the significant performance of Bitcoin today – Basic Attention Token (BAT) being one of them. It is currently trading +9.12% against the US Dollar and is one of the only major cryptocurrency pairs to be doing quite well today.

                While these conditions may seem confusing for participants who are new to this market, this is precisely the kind of environment I like to see. From 2015 to the all-time high in December of 2017, Bitcoin experienced a rotation of capital in the cryptocurrency market. Bitcoin would have periods of significant gains while altcoins sold-off and suffered. But then Bitcoin would flow into altcoins and we would observe the altcoin market experience massive gains while Bitcoin would experience smaller losses. The rotation of this capital is essential to providing liquidity and excellent speculation opportunities. This kind of behavior is very similar to what we see happen in traditional markets. For that example, we could say that equities are altcoins and gold is Bitcoin. Bitcoin is a hedge against risk and a source of stability while altcoins are considered the risk-on and speculative trade/investment. When these conditions are met – and if they continue – we have an exceptionally lucrative and massively larger cryptocurrency market to look forward to. And if history repeats itself (as it does), then we could be observing the beginning of a 3+ year bull market for cryptocurrencies.