When Bitcoin finally started to cool, capital started to flow into Ethereum causing a massive outbreak. The rapid rise took the altcoin up more than 50% in just two days, but a sell-off stopped the token’s booming trend in its way.
Crypto is bullish and more benefits cannot be ruled out. But a fractal representing the rise of the altcoin experienced from 2018 to 2019 has been discovered. And if the fractal acts as a roadmap of what to expect, the apex may be in for now.
Fractal found on Ethereum charts may lead to correction
The cryptocurrency market is bullish again, thanks to Bitcoin breaking its former record high and reclaiming the attention and capital of speculators everywhere.
Institutions are now realizing the potential of the extremely scarce assets, and it has led the high-net-worth class of investors to consider which other cryptocurrencies might have a similar value proposition.
Related reading | Sell Setup Triggers on Ethereum After Monster 50% Two-Day Peak
Investors need look no further than the best altcoin, and the mint that is strongly behind Bitcoin. While Bitcoin is the main mover of the rest of the industry, Ethereum is the most different base altcoins are built on.
Although the very first cryptocurrency managed to break its all-time high, Ethereum has yet to do so. And according to a potential fractal playing out on ETHUSD price charts, there could be more of a temporary high in the near term.
Why a top is temporary for the final Altcoin Season Rally
Fractals are repeating patterns that forms on asset price charts – possibly as a result of investors’ cyclical emotional patterns. Since crypto is a speculative asset class, it is especially sensitive to investor sentiment.
When the assets are bullish, they appreciate much more than anything in the traditional financial world, and when they crash, they destroy most of their previous rallies.
Ethereum could be mimicking the bullish impulse from 2019 on a larger scale | Source: ETHUSD on TradingView.com
In the above chart, an ascending wedge pattern – typically a bearish structure – by breaking upward, the cryptocurrency entered bull mode. From a bottom of $ 80 deployed around the end of 2018, Ether moved to $ 360 each mint. It eventually came back 75% to about $ 90 in 2020.
When that low point was tested again, confidence in the uptrend shot into high gear, and less than 12 months later, the highest altcoin is now trading at over $ 1,000. The 2020 price action now resembles the exact same pattern that led to the 2019 peak, but on a much larger scale.
Not only do the two ascending wedges break out part of the repeating pattern, but the relative strength index also shows measurements similar to the previous pattern.
After the breakaway of the wedge, a sharp rise completed the rally. This week, Ethereum broke out of another rising map formation, resulting in another steep rise.
According to the fractal pattern, a high should be set after the wedge breakout loses momentum. And while it’s not clear if the fractal is valid until it is completed, both peaks from the top of the wedge each reached the same red dashed trendline.
Will be the top altcoin suffer the same fate in the crypto market as last time? It is entirely possible, but Elliott Wave Theory suggests that at most the altcoin will see a 38.6% correction before resuming its rise well above its previous peak.
Featured image from Deposit Photos, Charts from TradingView.com