Could the big gains lie away from bitcoin in the crypto recovery?

The cryptocurrency space has been the big outperformer over the course of the past two months, with bitcoin (96%) and bitcoin cash (158%) leading the way over that period.

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Bitcoin is typically seen as the safest of the major cryptos, with the price of this giant unsurprisingly rising, gaining traction ahead of many others. Much like a bluechip stock, bitcoin also lost less ground than most over the course of this protracted sell-off.

^{Source: IG charts}

However, while we have seen this impressive recovery for bitcoin, there will be many who see this as the starting gun for a wider recovery in the cryptocurrency space. Just as we have seen bitcoin lose less ground than many of its peers, the upside could also be dwarfed by some of the smaller, more risky coins. Using the prior highs as a proxy for potential future gains, we can see that there is a substantial amount to be gained if we saw the market fully take hold in the manner seen at the end of 2017.

The table below highlights the differential for some of the top currencies out there, with bitcoin cash once again showing up as a coin with huge upside potential.

^{Source: IG charts}

Bitcoin cash price surge remains short of key resistance

With that clear appeal, we can take a look at the obvious market of most appeal; bitcoin cash. The weekly chart highlights the fact that technically, the downtrend remains in place with the creation of lower highs only invalidated with a break through 637. With the price rallying into the zone between the 61.8% and 76.4% Fibonacci retracements, there is a chance that the sellers could come back into play soon enough.

The daily time frame provides us with more granular detail, with the price moving higher in waves since the bottoming out process evident throughout quarter one (Q1) 2019. Now that we have a more supportive environment in play, the ability to break through this Fibonacci zone between 422 and 504 will be crucial.

A rise above 637 is certainly the key signal for bulls, yet a rise above 504 would also sign that we could be seeing something more bullish than simply a retracement. With the current momentum picture looking relatively overbought (stochastic oscillator), there is a chance we could pull back should the price fall below trendline support. However, such a move would be expected to provide a short-term drop, with a wider bearish picture only coming in the event of a break below the 229 swing low.

Ripple price managed to break out of downtrend

Ripple is another major currency that looks appealing when looking at the sheer size of the sell-off. Unlike bitcoin cash, we can see that ripple has managed to break out from its downtrend, with the rally through 38 providing a clear break from the norm.

We could see a pullback over the near term, yet the 28 level looks like a clear floor below which to put any stops. Thus, such downside would simply look like a buying opportunity.

Ether price matches ripple breakout

Ether has seen over 80% of upside over the course of the past two months, with the price gradually gaining traction to surge sharply in May. The break through 159 certainly sparked more confidence in this upside move. Much like ripple and bitcoin, we have seen a break through key swing high resistance to negate the prior bearish trend.

Much like many of the others, we have a potential retracement coming into play after the recent gains, with the stochastic turning lower for a possible head and shoulders formation. Nonetheless, a bullish picture will remain in play unless the price drops below 147.

In summary, bitcoin cash has both the highest two-month return, and highest possible pay-off to reach the prior record high. However, with bitcoin cash failing to break from its long-term downtrend, the likes of ripple and ether could provide greater confidence of an impending uptrend. For the short term, a retracement does look a distinct possibility, yet this could provide a more advantageous opportunity for crypto bulls.