- Mark Newton is a 25-year Wall Street veteran and the global head of technical strategy at Fundstrat.
- Newton shares 5 popular altcoins that are near or at their 52-week highs and close to breakouts.
- He also explains why the fourth quarter is most likely going to be “very positive” for bitcoin.
Bitcoin is taking a breather after surging to new all-time highs last week driven by the launch of the first futures-based bitcoin ETF.
The slight price pullback may be linked to a popular strategy during crypto bull runs where traders who have been invested in bitcoin take profits and rotate capital into altcoins in the hope of turbocharging their gains.
“We have definitely seen at least some buying power rotating into some of the altcoins,” Armando Aguilar, a digital asset strategist at Fundstrat Global Advisors, said in an interview.
The problem is there are over 9,000 altcoins today, with even more being minted on a daily basis. To sift the wheat from the chaff, investors need to analyze both the fundamental factors and technical trading indicators of these fast-evolving crypto assets, according to Mark Newton, a 25-year technical analysis veteran on Wall Street.
“I think technical analysis is extremely important in crypto because a lot of the fundamentals don’t accurately lead you to know when the price is going to rise and fall,” Newton, who recently joined Fundstrat as global head of technical strategy, told Insider in an interview.
Bullish factors such as increased institutional ownership and adoption of crypto could be present in the market for weeks or even months, but they do not necessarily cause prices to move, he observed.
“So I often look at a combination of technicals with good fundamentals, and that’s truly a win-win,” he said.
5 popular altcoins close to their own breakouts
Technical analysis is essentially the study of price movement, volume, sentiment, and trading flows in order to identify and project price trends.
“When you see prices get above certain levels that cause the shorts to cover, you see people come in to try to buy technical breakouts and then volume expands,” Newton said. “So technicals just help you to take the blindfold off and be able to examine price action and how things move, and these patterns tend to repeat over time.”
Looking at the crypto market, Newton noticed that popular altcoins including Ethereum (ETH), Solana (SOL), Polkadot (DOT), Tezos (XTZ), and Binance coin (BNB) are either at or near their 52-week highs and look close to their own breakouts.
“Those are just attractive to me based on their technical formations,” he said. “Typically, the ones that are starting to show strength are the ones that are will continue to show strength.”
Ethereum, which was trading at $4,233 as of Monday afternoon, has burned 603,452 or around $2 billion worth of ether tokens since its London hard fork, a network upgrade that aims to facilitate its transition from proof-of-work to proof-of-stake.
In an October 20 research note, Newton wrote that price targets for ethereum above $4,027 should not face much resistance at $4,410. Moreover, it will likely surpass this level and rally to targets near $4,951, with additional technical projections up to $5,826. His technical analysis can be seen in the chart below.
Fundstrat Global Advisors
Polkadot, which was trading at $44 as of Monday afternoon, has also “begun to show real strength in recent weeks following its breakout above September 2021 highs,” Newton noted.
“This puts the altcoin within striking distance of all-time highs made back in May,” he wrote. “Recent consolidation this week is not bearish technically but merely signifies minor consolidation.”
Created in 2016 by Ethereum co-founder Gavin Wood, Polkadot recently announced it will go through a key development in November where its parachains will link to external blockchains such as bitcoin and ethereum.
Earlier in October, polkadot experienced pullbacks that saw it dip below $30, but Newton thinks that the correction should “prove short-lived and find support initially near $38, then $36.50, which would represent areas to buy dips.” Meanwhile, it is probable that the altcoin could challenge the $49 to $50.75 price levels in the coming days or weeks given its “improving structure and bullish momentum,” he added.
Fundstrat Global Advisors
He also highlighted solana as an altcoin that is “attractive to own” given the consolidation that has followed its 900% gain from July to September.
“Given that prices have successfully held up in the upper quartile of its range despite its sideways trading in the last month, this churning is thought to represent a very good risk/reward to buy SOL/USD,” Newton wrote.
The token, which was trading below $200 as recently as October 21, has risen to $213 as of Monday afternoon.
The decentralized blockchain is one of the fastest and lowest-cost layer-one protocols with over 400 projects spanning decentralized finance, non-fungible tokens, and Web3. The network claims to process over 50,000 transactions per second. Per data provider Defi Llama, the total value locked of all assets deposited in DeFi protocols on Solana had also reached an all-time high of $13.84 billion as of Monday afternoon.
Newton noted that a breakout above $167.47 for solana should lead at least to $235, with additional targets found at $308.54.
Fundstrat Global Advisors
A ‘very positive’ Q4 for bitcoin
Newton said he has an upward bias for bitcoin (BTC) between now and late November or early December.
The largest cryptocurrency, which was trading at $63,326 as of Monday afternoon, has been up eight out of the 11 fourth quarters since it started trading in 2010.
“Anything can happen but trends right now are still very much positive for bitcoin,” he said. “Seasonally, it’s also a very positive time for bitcoin.”
Based on prior price activities, Newton has set upside price targets for bitcoin to follow through to $72,500 and then $89,000, which would be “a 100% extension of the rally up from last March’s lows,” he wrote in the research note.
Yet, there are still bearish signs. The daily Relative Strength Index for bitcoin is overbought, which indicates that the token may be heading for a trend reversal or price pullback. But Newton thinks bitcoin’s seasonal strength and technical set-up will prevail in the near term.
“Bottom line, despite daily RSI having reached the highest overbought levels of the year, it’s right to favor additional gains,” he wrote.
Fundstrat Global Advisors