The recent reversal in Bitcoin’s price from its critical $70,000 psychological level has rekindled selling pressure in October’s crypto market. While Q4 is traditionally a bullish period, the current landscape shows several altcoins teetering on the overbought side, signaling that a larger market pullback might be on the horizon. This potential shift could urge cautious traders to consider offloading certain assets this month to protect their portfolios.
Key Altcoins to Consider Selling Before a Potential October Market Pullback
With October’s heightened volatility, some crypto assets still show promise for growth, but others—deemed overbought by market metrics—might be primed for downturns. Traders who look closely at key indicators like the Market Value to Realized Value ratio can pinpoint altcoins they might want to exit as market conditions evolve.
1. FTX (FTT)
The FTX token has lingered in a sideways trend for over a year, showing a subtle bearish bias on its daily chart. At press time, FTT was trading around $1.78, and its market cap stands near $584.1 million. According to Santiment’s data, FTT’s 365-day MVRV ratio has risen to the positive region, settling around 32%. This increase hints that the asset is overbought, as a high MVRV often signals profit-taking is due.
FTT has faced a significant drop recently, plummeting from $3.43 to $1.75, with its MVRV ratio adjusting down from 101% to 32%. This trend emphasizes that the token remains vulnerable to a further decline, and traders might consider this a red flag for continued downside risk in october.
2. Litecoin (LTC)
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Unlike many other october altcoins, Litecoin saw a robust recovery from $49.8 to $70, representing an impressive 42% gain in just three months. However, LTC encountered fresh selling pressure around the $76 mark, sparking an 8% pullback that dropped it to $70.6, leaving it with a $5.3 billion market cap. The 30-day MVRV ratio for LTC has jumped to 24.8%, a level suggesting that short-term traders are sitting on notable profits.
Typically, these speculative traders act swiftly to lock in gains, which could result in an uptick in volatility and additional selling pressure. Given this, some analysts caution that LTC’s near-term outlook may see further price drops if profit-takers step in.
3. AAVE
AAVE has not been immune to the market correction, as evidenced by a significant 14.8% drop, from $165.8 to $141. This recent downturn establishes a fresh lower high, hinting at a shift in sentiment from “buying the dip” to “selling the rally.” With the asset’s price showing signs of bearish momentum, AAVE could be on a path to further pullbacks.
The 90-day MVRV ratio for AAVE has also increased till october, landing at 2.36%, indicating that investors who bought AAVE within the past three months are now in profitable territory. This scenario might encourage additional selling pressure as these investors lock in their profits, potentially intensifying the short-term price correction.
Emerging Market Trends to Watch
As October progresses, investors may also want to monitor broader trends influencing crypto market sentiment:
- Interest Rate Announcements: The Federal Reserve and other global central banks are expected to make policy announcements that could ripple across financial markets, influencing investor sentiment towards risk assets like cryptocurrencies.
- Geopolitical Uncertainty: Ongoing geopolitical developments often add volatility to global markets. As investors become more risk-averse, funds could shift out of the crypto market, potentially impacting overbought assets the hardest.
- Investor Behavior: Many short-term traders closely monitor MVRV ratios, which may be driving some of the current volatility. High ratios can prompt selling waves, especially when profit-taking aligns with bearish technical indicators, as observed in FTT, LTC, and AAVE.
Conclusion: Caution Ahead
While it may be tempting to invest in top cryptocurrencies with the hope of further gains, the current MVRV ratios suggest that FTX, LTC, and AAVE are overbought and may face corrections. Investors might want to consider these metrics alongside broader market conditions when planning their strategies. By staying vigilant and monitoring key indicators, savvy traders can make well-timed decisions that align with both market sentiment and personal risk tolerance.
