Does Bitcoin Have a Leading Indicator?

Reposting an article from Avi and I, posted on Seeking Alpha.

In our last article we discussed the possibility that Bitcoin has started its run to our next long term targets of $65K and above. Within that article, we provided general guidance regarding what we’re looking for to suggest the bear market is over.

We want to turn now to alt coins. If you are not familiar with the term “alt coin,” it generally applies to all coins that are not Bitcoin. Often, the term is synonymous with the 100s of volatile small cap coins, many of which are junk assets. However, some have elevated to regular use, and have solved problems that Bitcoin cannot. In fact, some transact at a much higher rate of Bitcoin. Based on the action of many of these charts, they seem to be leading our larger cap coins higher.

While we’ve waited for our seemingly sluggish large cap coins - Bitcoin and Ethereum - to launch into third waves, many of these alt coin charts have run ahead. This leaves us to ask the question whether they are acting as canaries in the coal mine, and telling us that a new bull market has in fact started.

Binance Coin (BTC-USD), a coin that gives commission discounts to holders on the Binance exchange, is one such alt coin. This coin has nearly quadrupled off its December low while Bitcoin has rallied a miserly 25%. Moreover, it rallied off its lows in an impulsive five wave structure, further confirming that it has struck its bottom. Further, BNB is within spitting distance of all time highs, which were struck in January 2018, just after Bitcoin’s top. We’re now looking for a corrective retrace to re-enter our long trades.

Litecoin is another alt coin which has rallied from $22 to $60. While it has only completed three waves off the low, it has extended to the 1.618 extension off its lows. This suggests it may not be corrective, but we still need to see the 4th and 5th wave completed in the coming weeks to confirm that a bottom has been struck.

Bitcoin Cash, a fork from Bitcoin, has just broke out into its third wave this past weekend. If we see 5 waves completed over the coming weeks, it should move from today’s price of $148 to over $800.

These are just a few of the strong alt coin charts we’ve been tracking and trading in our crypto service at Elliottwavetrader.net. While over relying on correlation will leave one out of many good trades, certainly, we should expect Bitcoin to confirm this rally if the broader market is going to confirm a long term bottom. That said, we’ve been catching some great swing trades off the recent bottoms. And, if the larger caps can hold support and start to run, we will rotate into them as the alt coins begin hitting their local tops.

Recently, Ryan Wilday, my colleague with whom I have written this article, presented his outlook for 2019 as a featured speaker at the Moneyshow's Trader Expo in New York. For those that missed it and are interested, he will be doing a public webinar on Tuesday March 26th. Here is the registration link: https://register.gotowebinar.com/register/7136225586496739075