Bitcoin edged higher on Thursday, as investors set their sights on a new milestone amid conflicting signals in the broader cryptocurrency market.
Bitcoin Hovers Near Record Territory
The value of bitcoin (BTC/USD) climbed 1% to $4,624.00 Thursday morning, pushing its market cap to roughly $73 billion.
The BTC has broken out of a trading range that kept prices subdued below $4,400.00. Prices briefly traded above $4,700.00 on Wednesday, possibly setting the stage for a test of the psychological $5,000.00 threshold. Some analysts think we will reach that level soon.
The world’s No. 1 cryptocurrency has more than quadrupled since the start of 2017. The gains have been relentless with very few exceptions, as global investors embrace cryptocurrency as an asset class.
Ethereum (ETH/USD) is also approaching record highs after prices surged toward $400.00 on Wednesday. At present, ETH is up more than 1% at $384.00.
Bitcoin Cash Faces Uncertain Future
Since coming into existence one month ago, Bitcoin Cash (BCH) has experienced heavy volatility at a time when fellow cryptocurrencies are showing more lasting appeal. It’s not just that BCH has been volatile – its price action has been all over the map. What’s more, Forbes recently reported that BCH’s developer team has not provided much direction about the future of the new coin.
Analysts say that BCH’s extreme volatility is precisely because nobody knows what it’s truly worth.
Prices were up more than 5% on Thursday to trade near $574.00. That puts BCH at a market cap of roughly $9.5 billion. Only bitcoin and ethereum are valued more.
Chinese Economy Gives Off Mixed Signals
China, itself a dominant player in the cryptocurrency craze, is struggling to maintain its robust growth pace. The non-manufacturing purchasing managers’ index (PMI), which measures the country’s massive services sector, fell in August to the lowest level since May 2016.
The official non-manufacturing PMI dipped to 53.4 from 54.5 in July, government data showed.
However, factory activity expanded unexpectedly during the month, with the manufacturing PMI climbing up 0.3 point to 51.7.
On the PMI scale, anything above 50 represents growth. Anything below that level signals contraction.
China’s economy grew at a faster than expected 6.9% in the first half of 2017, but is struggling to overcome its heavy reliance on exports and investments. The country’s economic transition has boosted demand for bitcoin as mainland investors look to diversify out of yuan-denominated asses. So much so, in fact, that the People’s Bank of China clamped down on bitcoin exchanges to clamp down on virtual outflow.
Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction
Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.
XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.
XRP/USDT, 4-Hour Chart Analysis
While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.
Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.
LTC/USD, 4-Hour Chart Analysis
Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets
Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.
While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.
XRP/USDT, 4-Hour Chart Analysis
Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.
ETH/USD, 4-Hour Chart Analysis
Trade Recommendation: Ride the Next Rally of Bitcoin
The profit taking period that saw the Bitcoin market fall from 19,697 to a low of 13,501 in a matter of a few days is almost up. The market appears to have generated a new higher low and will use that level to make its next move up.
Technical analysis reveals a large reversal pattern in the hourly chart that could signal the end of the correction. In addition, volume has been steadily decreasing. On Coinbase, volume spiked by as much as three times its average value in the hourly chart during the height of selling. In the last seven hours, however, volume has been way below its average indicating that bears have lot ammunition. More importantly, RSI in the hourly chart is far from overbought territory. This gives the market a lot of room to breach resistance at 18,000.
The strategy is to buy the market when it goes above 18,000. With signs of selling exhaustion, bears may not put up much of a fight the next time the pair breaches 18,000 on Coinbase. Also, the market has no stiff resistance above 18,000 so it has a clear path to our target of 22,500.
Hourly Bitcoin Chart on Coinbase
As of the time of writing, Bitcoin is trading at 17,200.
Summary of Strategy
Buy: breach of 18,000
Support: 17,200, 16,800, and 16,450
Stop: Move below 16,450
Disclaimer: The writer 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.
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