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Analysis: Bitcoin Turns Volatile on Fork Day as Altcoin Prices Rise

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As traders and the major exchanges got ready for the start of the SegWit activation process, and the Bitcoin Cash fork, Bitcoin experienced a roller-coaster ride, despite the widespread optimism regarding the prospects of the coin. BTC rallied past $2900 overnight but spiked below $2650 today in early trading as trading got illiquid and nervous.  The currency remains inside the rising short-term uptrend for now, and although we expect volatility to remain elevated, new all-time highs are definitely in the cards in the coming days.

BTC/USD, 4-Hour Chart Analysis

Altcoins also showed strength overnight with Ethereum finally leaving the $200 level, and the other majors following the token higher. While the relatively weak Ripple and ETC are still not out of the woods, Monero, Litecoin, and Dash continue to be in bullish patterns. With the total value of the segment moving a tad above $90 billion today, we might be seeing the beginning of the broad rally that investors have been waiting for.  Let’s see how the charts look on this crucial day for the cryptocurrency segment.

Ethereum

ETH/USD, 4-Hour Chart Analysis

ETH respected the $200 support and it’s now on the way towards the crucial convergence zone near the $235 resistance, where the dominant declining trendline is also present in the area. With both the long- and short-term picture looking encouraging, we expect a move above that level and possibly above $250 as well. Support below $200 is found at $190 and near $175.

Litecoin

LTC/USD, 4-Hour Chart Analysis

LTC is trading just below the $44 level after the overnight bounce, but the coin is still within the declining short-term trend despite the rally. The $40 and $38 levels provide strong support for the currency, and as the long-term picture is getting more and more constructive, a break-out towards the primary resistance at $50 could be near.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash also moved higher with the other majors, but it remains below the short-term resistance at $190 for now, with the declining consolidation pattern still being intact. The rally didn’t change the technical setup, and although we still expect a move to $220 and beyond, more sideways action is possible until the dust settles regarding Bitcoin.

Ripple

XRP/USD, 4-Hour Chart Analysis

XRP is still among the weakest majors regarding the short-term picture, as it continues to hover above the $0.16 support, without showing strong momentum in any direction. A long-term base pattern is still forming, but the $0.18 resistance and the crucial zone around $0.22 is still ahead, with the declining trendline also being an obstacle for bulls. That said, investors could add to their positions here after the 10-week long correction.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

ETC is bouncing around the $14 level, just above the lower boundary of a crucial support zone, still being one of the weaker coins regarding technicals. The short-term picture remains neutral below $14.50 while investors could still add to their positions, as the long-term MACD is still in oversold territory.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero rallied off the prior declining trendline as we expected, but it remains stuck below the strong resistance level at $46 inside a trading range between that line and $37.  The short- and long-term picture both remain bullish, and we expect a move to $50 especially if ETH and BTC continue higher.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Bitcoin Volatility Hits One-Year Low, According to Blue Line Futures

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Although most traders are lamenting bitcoin’s 65% correction this year, the decline in prices has been accompanied by an equally large drop in volatility, according to Bill Baruch, President of Blue Line Futures. For long-term investors, this is a very good thing.

Bottoming Process Begins

Bitcoin’s precipitous drop from its December peak has drained the market of exuberance, allowing the bottoming process to finally begin, Baruch told CNBC in an interview on Monday.

Baruch explained that bitcoin’s volatility has declined to the lowest level in over a year, which means the bottoming process has begun. In his view, a price-bottom is not a specific point but a process that could take several weeks or months to materialize.

As Hacked reported last month, bitcoin’s corrections have grown less intense over time. Each decline has exhibited a higher bottom and was caused by lower trading volume, which means that the selloff was concentrated in fewer hands.

The latest correction may have partially deviated from that general trend, but only in terms of price and not volume. Bitcoin prices last week reached their lowest since early February. The observation noted above would have led us to believe that bitcoin’s recent reversal would stop short of the April bottom around $6,500 (based on Barchart data).

Nevertheless, Baruch maintains that the multiple selloffs have “wiped out most, if not all, of the over-enthusiasm” in the market. That same over-enthusiasm produced a general fear of missing out (FOMO) that led to the speculative run-up in prices we saw in December.

Looking long-term, Baruch maintains there is significant upside for the digital currency, singling out $10,000 per coin as the price to watch.

Bitcoin Showcases Greater Stability

Bitcoin has in recent months demonstrated extended periods of muted moves, which is a significant departure from normally trading activity defined by wild price swings. In early May, bitcoin was seen trading in its narrowest band in about six months. For about a week, BTC/USD hovered within a $500 range, showcasing a rare feat of stability for the largest cryptocurrency by market cap. At the time, bitcoin was trading between $8,600 and $9,200.

The cryptocurrency has declined sharply since, reflecting a broad market reversal that virtually wiped out April’s recovery. Crypto assets as a whole added $145 billion in April but have since lost $120 billion.

Price action over the past week also showcases how the cryptocurrency has seen its volatility drop compared with the historic norm. Data from CoinMarketCap shows a trading range of $500 for bitcoin compared with last Tuesday. For much of that period, prices hovered between $6,400 and $6,700.

That being said, bitcoin and the broader crypto universe continue to retain a level of volatility rarely seen in the financial market of 2018. Several factors continue to underpin these volatile moves, including low (and declining) liquidity, bad press and competing views about bitcoin’s underlying value.

Researchers at the University of Texas recently tried to show that the bulk of bitcoin’s volatility, and gains over the past year, can be attributed to price manipulation involving the dollar-backed Tether (USDT) and Bitfinex exchange. However, as Hacked’s James Waggoner showed Monday, Bitfinex would have needed to spend $1 million to push up bitcoin’s price level by four reference points claimed in the University of Texas report.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 457 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market: Stocks Extend Losses on Next Round of US Tariffs

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The main European and Asian indices and US stock futures are all significantly lower just before the Wall Street session, as Donald Trump announced that the administration will seek to extend the trade tariffs targeted at China. The extension would affect another $200 billion of products, and it would be a major escalation of the, so far relatively limited trade skirmish.

Shanghai Composite, 4-Hour Chart Analysis

Asian markets are underperforming as Chinese equities have been smashed below key support in the wake of the announcement, but the previously outperforming US indices are also close to breaking their short-term uptrends. That said, the Nasdaq continues to be relatively strong, and the Russell 2000 is the best performing global benchmarks, as small-cap stocks are benefiting from the trade tariffs.

S&P 500, 4-Hour Chart Analysis

The housing market has been in focus with regards to economic releases, and while housing starts beat the consensus estimate, the more forward looking building permits unexpectedly declined in May. As the Fed is expected to continue with rate hikes, at least until the end of the year, further cooiling of the housing market is likely as mortgage rates are steadily rising.

Dollar and Yen Shine

Dollar Index (DXY), 4-Hour Chart Analysis

Forex markets are reflecting the risk off shift as well, with the US Dollar and especially the Japanese Yen performing well, and the Euro, the Aussie, and the Canadian Dollar lagging behind. Emerging Market currencies are still under heavy selling pressure, as trade war fears sparked flight to safety flows.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

While European markets are only hitting one-month lows, the Turkish Lira and the Brazilian Real are trading near all-time and multi-year lows respectively, as the Dollar’s strength continues to hut the fragile currencies.

Treasury yields are lower, but as safe haven flows are still concentrated on the longer end of the curve, short-term yield pressures haven’t eased much while the flattening of the yield curve continues in earnest.

Gold Futures, 4-Hour Chart Analysis

Commodities are in the red across the board, as the risk-off trade spread to the segment, with gold outperforming somewhat. The precious metal is still well below the $1300 level after last Friday’s steep drop, and it briefly spiked below the $1275 level as well. We still expect gold to resume it’s uptrend so the current levels could be good for accumulating investment positions in the metal. Crude oil is also lower, as volatile trading continued as expected, with the WTI contract trading near the $65 per barrel level before the OPEC meeting.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 277 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Coins Pop Higher as Consolidation Continues

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Trading activity increased in the major coins today, amid a mixed news flow, and for now, bulls scored a small victory following last week’s bearish price action. Bitcoin, Ethereum and most of the largest digital currencies gained several percents, despite the weekend’s deterioration, and although the technical setup didn’t change significantly, an immediate breakdown has been averted.

The discouraging BIS report that has been making waves today wasn’t enough to push the coins below support, but for now, the short-term strength left the trading range intact with the primary resistance levels still keeping a lid on prices. Given the uncertain long-term picture, the coming weeks will be crucial for the largest coins and the whole segment alike, with Bitcoin being in the center of attention after its long period of relative weakness.

BTC/USD, 4-Hour Chart Analysis

Bitcoin held up above the April low, despite the bearish short-term picture, and the coin the highest price level in a week, breaching the $6750 level in the process. While the most valuable coin fared relatively well today, it clearly remains a laggard from a broader perspective, and it is still trading in a declining short-term trend, with several strong resistance levels just ahead.

The $5850 is the key from a long-term perspective, with further support levels at $6500 and $6275 and resistance ahead at $7000 and $7350.

Bearish Rotation Among Altcoins

ETH/USD, 4-Hour Chart Analysis

On a negative note, the leaders of the latest rally were among the weaker coins today, and that is a sign of bearish rotation in a segment, and until major resistance levels are broken traders shouldn’t enter new positions here. Ethereum managed to rally above $500 yet again, but it remained below week’s bounce high, leaving the trading range intact, while the declining short-term trend is also still dominant.  Strong resistance is still ahead between $555 and $575, while support below $500 is found at $450, $400, and $380.

EOS/USD, 4-Hour Chart Analysis

EOS, which is one of the strongest majors technically speaking also edged higher today, but it remains stuck in the declining short-term pattern, and below key support/resistance zone near $12. The coin is well below last week’s high and until a confirmed short-term trend change, traders shouldn’t enter positions here.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 277 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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