The broad cryptocurrency landscape continues to trace out a major-degree corrective phase that was born into existence about two weeks before the end of the last calendar year. That makes this process now roughly 7 months old.
The crypto world moves at a fast pace relative to other markets, and 7 months is a lifetime, so traders and investors are doubtless hard on the search for tangible signals of a coming change in character in the charts.
Naturally, for much of the general public, Bitcoin is somewhat synonymous with the cryptocurrency complex. In a sense, it functions as almost a major index or average – like the S&P 500. While this is far from true in any literal sense, the correlation framework that defines cryptocurrencies in general often reinforces this intuitive notion perhaps more than it should.
Hence, whether justified or not, in many important ways it is hard to get away from the sense that, as Bitcoin goes, so goes crypto.
As such, when we take a close look at the Bitcoin (BTC) chart, we are looking at the defining trend for the complex as a whole. And that trend is quite clearly “down”, and has been for the better part of the past eight months.
Without question, the key level to appreciate here is the $6000 level. In terms of closing prices, this level more or less held as key support back in early November of last year, before the most significant and maniacal portion of the Bitcoin bubble sprint higher from mid-November to mid-December.
This same level also played a significant part in defining the lows that Bitcoin reached in early February of this year. And, as fate would have it, this is just about the level at which we held that key support late last month.
It is not insignificant to note that the lows recorded in BTC in April 2017 – as a final check before the parabolic move higher began – were right around the $1000 level. If one establishes this level as the defining low point in a Fibonacci retracement ruler, then the $6000 level is also a near-perfect 78.6% Fib retracement of the entire bubble run.
However, perhaps the most important point is this: we recently saw a break underneath the March/April 2018 lows, followed by a test of the underside of the $6000 level, further followed by a grinding rally that has now lasted nearly two weeks. This rally has not been accompanied by any true game-changing positives for Bitcoin in terms of news or headline drivers.
This is a bit of a red flag for bears holding short interest in the BTC futures: a test of new lows that gives way to a sharp rally on no new bullish catalysts can often be a sign of a selling exhaustion point.
Hence, one may make a case that the BTC chart is beginning finally to carve out the ingredients of a base under construction. Stay tuned!
As one might expect, looking at the ETH chart is very similar to looking at the Bitcoin chart. The correlation between BTC and ETH has been quite high since midway through last year.
However, we have begun to see a bit of a divergence in recent action that suggests some favoritism toward ETH during the immediate future as compared to Bitcoin.
The divergence is built off the fact that, while Bitcoin broke beneath its March/April 2018 lows during June trade, ETH held above that same pivot point on its own chart, putting in sharp support at the very important $400 level.
At the same time, Ethereum (ETH) was able to carve out a pivot at an extreme oversold reading on the RSI chart, but a positive divergence relative to the same point on the RSI oscillator seen several months ago at the key pivot low.
While this may signal a potential for bullish action ahead in ETH, it is important that traders not get carried away with the small timeframe signals.
The fact still remains that, in the case of both of these coins, and in the larger case defining the crypto landscape in general, we are dealing with charts that are mostly still solidly underneath their major moving averages, with many of them moving underneath downward sloped averages.
In such a situation, the odds don’t favor aggressive long positioning until some level of further technical confirmation starts to rear its head on the charts.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
Image courtesy of Pexels
Charts courtesy of tradingview.com
Ethereum Flippening Bitcoin In 5 Years?
The dominance of Bitcoin (BTC) in the crypto markets due to the bear market, currently stands at 55.2%. Ethereum’s dominance is a distant second at 10.8% of the total cryptocurrency market capitalization. This is despite the fact that the value of ETH is still shaky with many traders postulating that it could get worse for the digital asset before it gets better. Ethereum’s decline has been blamed on three factors outlined below:
- Congestion issues on the network
- ICOs cashing out the ETH raised in the ICO boom of last December to late February this year
- Traders shorting ETH due to the above two reasons
Ethereum Flippening Bitcoin?
In a tweet on the 18th of September, Weiss Ratings stated that ETH will grab 50% of Bitcoin’s market share in 5 years. Doing the math, this means Ethereum flippening Bitcoin in the markets with a dominance that will be around 38%. BTC would be at half its current value, and at 27.6% of the total crypto market cap.
The full tweet from Weiss Ratings would go on to explain why this would happen:
“#Bitcoin will lose 50% of its #cryptocurrency market share to #ETH within 5 years, due to it offering more uses and being backed with superior #blockchain technology. We completely agree – unlike #BTC, which is a one-trick pony, the limit of…
Crypto News: What Happened To Bitcoin?
The crypto news of the day is what the heck happened yesterday in Bitcoin? In a matter of 2 hours, we saw the Bitcoin price go from 6320 to 6080 on Bitmex and then rocket higher to 6580. In the process, stops were cleaned out for both longs and shorts.
For all of 2018, Bitcoin has been a perfect vehicle for swing traders. The market has been playing support and resistance levels perfectly. The play has been to buy Bitcoin around the 6000 level and sell above 7000. Until this pattern changes, it’s what traders and investors need to keep doing. Yesterday’s price action, while crazy and extreme, does still support this strategy.
Why the crazy move in Bitcoin?
There are a number of thoughts as to why Bitcoin made the move that it did. They are technical related and don’t involve a fundamental reason. The first is that there are bots on Bitmex that go hunting for stops. The bot utilizes inside knowledge of where the orders are clustered. If the bot can move the market to where the stops are, it can get filled.
The second is that yesterday was the expiration of the CBOE futures contract. I am an ex-futures trader (now crypto) and know that expiration days can see some crazy moves. This is because it’s the last day to close a position on that futures contract.…
XRP Rally Lifts Bitcoin and Ethereum
It’s quite surprising to be writing this, but the XRP rally lifted Bitcoin and Ethereum off yesterday’s lows. As I wrote yesterday in covering Bitcoin, my bullish enthusiasm was dampened by Bitcoin’s $300 drop. XRP rising has given renewed hopes that the lows for the year are in and higher prices are ahead.
The most frustrating part about the XRP rally was the news put out by our competitors. We read the XRP rally was due to xRapid launching soon and also that a major Saudi Arabian bank had joined the Ripple network for international payments. I’ve been trading cryptocurrencies long enough to know that no one knows the exact reason why something happens in the market. This is a major buy spike that came out of left field.
I am certainly feeling better about Bitcoin now than I was 24 hours ago. The lack of volume and the price action felt like the market was heading lower. Today, however, we are back around the 6350 levels.
The problem is that it still not enough to make me buy more Bitcoin. We are still in the middle of the range between 6100 and 6500. This neutral zone is not an area that I want to be putting on trades. Yesterday’s jump was indeed positive, but need proof that it was not…
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