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Bitcoin Price and Seasonality: The Coming Rally? 

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A confluence of technical and fundamental indicators has sparked a big rally in the price of bitcoin this week. The cryptocurrency has found support at $7,400 and, after a short breather, appears poised to test $8,000 in relatively short order.

While the debate over bitcoin’s short-term outlook continues, a historical price analysis reveals that the summer sizzle is nothing new. In fact, the months of July and August tend to exhibit strongly bullish patterns going back six years.

Bitcoin’s Hot Summers

The adage “sell in May and walk away” aptly describes trading patterns of traditional markets such as stocks but appears to go against the grain of bitcoin’s price patterns. Historically, bitcoin has generated large returns in the summer months. Going back to 2012, the only major outlier was 2014 when bitcoin rallied in July but fell in August.

While bitcoin has rallied over the past 48 hours, its gains for the month of July have been modest in comparison to previous years. A rosy August outlook suggests prices could be poised for a bigger breakout in the near term.

Although past performance is no guarantee of future success, seasonality plays a vital role in our understanding of the financial markets. In fact, there is an entire literature devoted to understanding how seasonal influences affect market prices.

Bitcoin: Starting Slow and Finishing Strong

Market researchers have also identified price patterns at different points of the year, with the “January effect” and “Santa Claus rally” forming a critical backbone to our understanding of seasonality.

Unlike stocks, which typically rise in January, bitcoin usually struggles out of the gate. Going back six years, the bitcoin price has declined in January in the following years: 2012, 2014, 2015, 2016 and 2018. Given the relatively small sample size, it’s not entirely clear why bitcoin struggles to start the year. However, the most recent January downturn was not unexpected given the previous month’s massive peak.

Although bitcoin often starts the year in a defensive position, the price has historically rallied in December. To get there, we usually contend with another bumpy month in the form of September.

Against this backdrop, the worst months for bitcoin tend to be January, May and September. So far this year, January and May have been difficult months for the cryptocurrency. It remains to be seen whether history will repeat itself in the coming months.

Bitcoin Price Levels

After a brief dip, the bitcoin price has held relatively steady on Thursday, with values hovering well north of $7,400. Trading volumes are a healthy $5.6 billion, well above the minimum threshold that usually accompanies a major rally attempt.

Bitcoin continues to trade near 40-day highs. Following the successful defense of $7,200, the bulls could be in position to extend the rally toward $8,000 – a level that has eluded BTC/USD for the better part of two months.

According to Barry Silbert, founder of the Digital Currency Group (DCG), the bitcoin price may have finally bottomed as institutional traders look to stake their position in the market.

In a recent interview with CNBC, Silbert said, “…the bears just kind of ran out of energy,” noting that bitcoin has managed to overcome overwhelming FUD.

“When the chair of the Fed says negative things about bitcoin, and Howard Marks says negative things about bitcoin, and Ken Griffin says negative things about bitcoin, and bitcoin doesn’t move, I think that’s a bullish sign,” he said.

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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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Crypto Update: Coins Turn Lower After Choppy Weekend

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The major cryptocurrencies are slightly lower today in early trading, as Sunday’s modest rally faded away without major technical progress. Most of the coins are stuck in narrow trading ranges, and last week’s spike well above the current price levels, as buyers failed to take control of the market.

That said, we haven’t seen strong negative momentum either, and although the bearish long-term setups remain intact, there is no immediate danger of new bear market lows in the segment.

Patience is still the name of the game for crypto investors, since there is no evidence of a broader trend change that would justify a more constructive investment position. Our trend model is on sell signals across the board on both time frames, and the bearish pressures are still apparent on the charts, even considering the lengthy consolidation period. Given the negative long-term trends, odds still favor a test of the lows in most case, particularly in the light of the lack of bullish leadership.

IOTA/USD, 4-Hour Chart Analysis

While most of the majors are still above the lows hit just before the Tether-turmoil, there are several relatively weak coins that could lead the market lower in the coming weeks. Especially Ethereum, Liteocin, Dash, and EOS point a negative picture of the market, while Ripple and Bitcoin are still the most encouraging form a bullish standpoint, even as they also failed to signs of bullish momentum.


BTC/USD, 4-Hour Chart Analysis

Bitcoin is back near the $6400 level today, after drifting towards the $6500 resistance during yesterday’s rally,  but the coin is still well clear of the $6275 support level, trading clearly within last Monday’s range. Our trend model continues to be on a short-term sell signal, while the long-term picture is still neutral for the largest digital currency.

Traders and investors still shouldn’t enter positions here with further resistance levels ahead near $6750 and $7000 and with support levels below $6275 found near $6000, $5850 and between $5000 and $5100.

Altcoins Slightly Lower as Stellar Fails to Break Out

XRP/USD, 4-Hour Chart Analysis

Ripple and Stellar have been showing some positive signs last week, but they both failed to make significant technical progress, confirming the segment-wide selling pressure. Ripple is threatening to move below the $0.42-$0.46 level, despite the rally above its triangle consolidation pattern, and a break below $0.42 would likely trigger a test of the $0.355 support.

For now, the short-term sell signal remains in place due to the lack of follow-through, and traders should be cautious with new positions. Strong resistance is still ahead at $0.51, $0.54, $0.57, while further, weak support is found near $0.375.

Stellar/USD, 4-Hour Chart Analysis

Stellar is trading very close to the key long-term support zone near $0.24 that has been dominating trading for several weeks, and despite the rally attempts, the coin is still not out of its bear market. That said, should a broader trend change occur, Stellar would likely be among the leaders of renewed advance, but for now, traders and investors should still stay away from the coin.

The declining long-term trend is intact, with strong resistance levels ahead near $0.265 and $0.2835, while support levels are found near $0.235, $0.21, and $0.1935.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still stuck in a very narrow range after the weekend, with the $200 support/resistance level still being in the center of attention. The bearish broader setup is unchanged in ETH’s market, with the coin still being relatively weak among the majors.

Traders and investors shouldn’t open new positions her, with further support found near $180, $170, and $160, and with strong resistance zones ahead near $235 and $260.

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 380 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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Bitcoin

Bitcoin Price Resumes Narrow Trading Pattern as Bulls Struggle for Momentum

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Bitcoin was back on the defensive Monday, as prices approached a key psychological support following a series of failed rallies last week. The leading digital currency by market capitalization is caught in a low-volatility, low-volume trading pattern that could keep prices firmly contained for the foreseeable future.

BTC/USD Update

The bitcoin price reached a low of $6,410 on Monday, according to CCN, before rebounding modestly later in the session. At the time of writing, BTC was down 1% at $6,473, according to CoinMarketCap. Prices reached a high of around $6,552 over the weekend.

Bitcoin continues to trade at a premium on Bitfinex, with the digital currency now offered at $6,587.

At current values, BTC is capitalized at $112.3 billion for a 53.7% share of the overall market. The combined value of all digital assets in circulation hovered near $209 billion at the start of Monday. Trade volumes across all cryptoassets reached $10.8 billion.

Low Volume, Low Volatility

Bitcoin’s price action has narrowed significantly over the course of the year, as the introduction of futures trading helped markets stabilize following an adrenaline-filled 2018. Although BTC continues to trade at roughly a third of its all-time high, it has carved out a firm price floor and has exhibited much lower volatility than in previous years.

The sharp decline in volatility can be highlighted by the bitcoin volatility index, which tracks daily fluctuations in BTC’s open price. Over the past 30 days, bitcoin’s volatility index has averaged 1.81%, according to Bitvol.info. This number represents the extent of BTC’s average fluctuation over that period.

Of course, the sharp drop in volatility isn’t all positive news, especially for day traders and speculators of virtual currency. For bitcoin, declining volatility also means a sharp drop off in daily trading volumes.

Daily turnover in BTC approached yearly lows on Sunday, hitting a low of around $3.1 billion, according to CoinMarketCap. For sustained rallies in bitcoin to occur, trade volumes of at least $4 billion are generally observed.

A lack of clarity on the direction of bitcoin and the broader market will likely keep price action limited over the short term. However, as we’ve observed repeatedly this year, prolonged periods of narrow trading ranges are often followed by sharp pullbacks in the market. This was observed earlier this month before a sudden selloff of Tether (USDT) propelled bitcoin sharply higher.

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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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Altcoins

Minor Bounce Lifts Crypto Market Cap Above $211 Billion; Tether Circulation Plummets

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Crypto prices traded modestly higher on Sunday, as bitcoin regained its footing above $6,500 and major altcoins avoided further losses.

Market Update

The cryptocurrency market capitalization on Sunday peaked at $212 billion, the highest in five days. At the time of writing, the market was valued at $211.5 billion.

Most assets ranked in the top-20 had reported minor gains over the last 24 hours, a period marked by lower trade volumes. The bitcoin price has returned above $6,500 on trade volumes of just $3.2 billion. The leading digital currency continues to trade at a premium on Bitfinex.

Meanwhile, Ethereum rose half a percent to $206. XRP also climbed 0.5% to $0.459. Bitcoin cash was last seen trading above $449 for a gain of 1.6%.

Stellar XLM was the only top-ten coin not to report gains at the time of writing. However, the no. 6 coin by market cap has returned more than 13% over the past week, far outpacing the broader market.

Trade volumes have declined steadily over the past week, as markets re-balanced following a sudden spike on Oct. 15. Digital exchange volumes have fallen to $9.7 billion on Sunday, according to CoinMarketCap.

Tether Market Cap Plunges

Since the start of October, Tether has pulled more than $600 million worth of USDT out of circulation, leading to a sharp drop in the stablecoin’s market cap. Cryptocurrency exchange Bitfinex, which is run by the same executive in charge of Tether Limited, appears to be leading in the offload of USDT tokens. As CCN recently reported, Bitfinex has initiated six transfers of USDT funds to the Tether Treasury this month. The latest transfer was initiated on Wednesday when Bitfinex sent 50 million USDT to the Treasury.

Most of the outflows from Bitfinex occurred long before USDT lost its peg to the dollar in a single-day crash on Oct. 15. USDT briefly fell below $0.90 that day before quickly recovering around $0.94. Currently, one USDT is equivalent to $0.984 U.S., according to CoinMarketCap. Some exchanges are quoting USDT as low as $0.96 on Sunday.

The sudden decline in Tether’s circulation comes at a time when the company is facing heightened scrutiny over its dollar-backed reserves. An influx of alternative stablecoins offering greater transparency and regulatory oversight may also be undercutting demand for USDT.

Case in point: the Gemini Exchange’s GUSD stablecoin reached a high of $1.19 on Tuesday before settling around parity against the dollar. Unlike USDT, the Gemini Dollar has obtained regulatory approval from the New York Department of Financial Services. On the opposite side of the spectrum, Tether has been subpoenaed by federal regulators over its connection with Bitfinex and failure to prove its dollar reserves.

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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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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