When Bitcoin finally cooled, capital flowed into the Ethereum, causing a huge outbreak. The rapid surge resulted in the altcoin gaining over 50% in just two days, but a sell-off halted the token's booming trend.
Crypto is bullish and more upward movements cannot be ruled out. However, a fractal was discovered that accurately mimics the altcoin surge from 2018 to 2019. And if the fractal serves as a roadmap for what to expect, the tip might be in there for now.
Fractal found in Ethereum charts could lead to corrections
The cryptocurrency market is bullish again as Bitcoin breaks its previous all-time high and regains the attention and capital of speculators everywhere.
Institutions are now realizing the potential of the extremely scarce asset and have prompted the high-net-worth investor class to consider which other cryptocurrencies could have a similar value proposition.
Related reading | Sell setup triggers on Ethereum after 50% two day monster surge
Investors need look no further than the high-ranking altcoin and the coin that is strong just behind Bitcoin. While Bitcoin is the main engine for the rest of the industry, Ethereum is the foundation on which most other altcoins are built.
With the altcoin still well below its previous all-time high, FOMO recently turned to smart contract-centric cryptocurrency before the asset was revalued as fast as Bitcoin in 2020.
Although the first cryptocurrency broke its all-time high, Ethereum has yet to do so. And according to a potential fractal playing out on the ETHUSD price charts, a short-term, temporary peak could be ahead of this point in time.
Why a top is temporary before the last altcoin rally
Fractals repeat patterns that form on asset price charts, possibly due to cyclical emotional investor patterns. Because crypto is a speculative asset class, it is particularly vulnerable to investor sentiment.
When assets are bullish, their value rises far more than in traditional finance, and when they crash they wipe out most of their previous rallies.
Ethereum could emulate 2019's bullish impulse on a larger scale | Source: ETHUSD on TradingView.com
In the table above, an ascending wedge pattern – usually a bearish structure – that breaks upward has put the cryptocurrency in bull mode. From a low of $ 80 in late 2018, ether stood at $ 360 per coin. Ultimately, 75% was traced back to around $ 90 in 2020.
After retesting that low, confidence in the uptrend shifted into high gear and less than 12 months later, the top altcoin is now trading above $ 1,000. The price movement in 2020 now closely resembles the pattern that led to the spike in 2019, but on a much larger scale.
Not only do the two ascending wedges break up part of the repeating pattern, but the relative strength index also shows readings that are similar to the previous pattern.
After the wedge erupted, a sharp rise ended the rally. This week, Ethereum broke away from another ascending card formation, resulting in another steep climb.
Related reading | Ethereum "anti-network effect" shows "DeFi has outgrown the altcoin"
According to the fractal pattern, a high should be set after the wedge breakout has no more momentum. Interestingly, while there is no telling whether the fractal is valid until it is completed, both peaks from the top of the wedge reached the same red dashed trend line.
Will the top altcoin in the crypto market suffer the same fate as last time? It is entirely possible, but Elliott Wave Theory assumes that the altcoin will only see a 38.6% correction at most before continuing to climb well past its previous high.
Featured image from deposit photos, charts from TradingView.com