Markets
XRP, LINK, ETH stand out compared to BTC in the analysis of sector rotation, DOGE’s difficulties
Cryptocurrency traders looking for clues about pockets of the cryptocurrency market that see signs of green shoots might want to consider (XRP)Chainlink (CONNECTION) token and the ether of Ethereum (ETH).
This is the message from Fairlead Strategies’ latest analysis of the 12-week relative rotation chart of major alternative cryptocurrencies (altcoins) versus bitcoin (BTC).
The Relative Rotation Chart (RRG) is a visual representation of the relative strength and momentum of multiple assets (altcoins) versus a benchmark (BTC). The x-axis measures the relative strength of altcoins versus BTC and the y-axis indicates the momentum of altcoin performance.
The chart includes four quadrants: leading, weakening, lagging, and improving. The main quadrant (top right) indicates strong relative strength and positive momentum, weakening (bottom right), strong relative strength but negative momentum. Lagging (bottom left) represents weak relative strength and negative momentum, while improving indicates weak relative strength but positive momentum.
XRP’s move into the improving quadrant from the lagging quadrant, which accompanies ETH and LINK, indicates that the three coins still have lower relative strength compared to BTC, but their performance is gaining momentum.
“We use RRGs [relative rotation graph] to evaluate the cyclicality between the best altcoins normalized compared to bitcoin. Some altcoins have less downside momentum than bitcoin, with Chainlink joining Ether and Ripple in the improving quadrant,” analysts at Fairlead Strategies said in a note to clients on Monday.
The positive shift from the lagging quadrant to the improving quadrant suggests that a rotation opportunity could occur in the coming weeks, whereby capital could flow into the improving sector as investors seek exposure to the resilient corners of the cryptocurrency market.
Momentum traders tend to see the cross in the improving quadrant as a potential opportunity, indicating that the asset is showing signs of improvement and could outperform in the near future.
DOGE, SOL and BCH are in the weakening quadrant and point to the left, indicating continued underperformance and an imminent move to the lagging quadrant. The remaining major altcoins are already in the lagging quadrant, showing both underperformance and negative momentum versus BTC.