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Bitcoin Update: Transition from Depression to Disbelief

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Based on market cycle psychology, depression is the state where people have lost all hope in the market. They believe that the downtrend is a bottomless pit and the market will never again reach its former glory. This discourages everyday investors from entering the market when in fact, this is the point of maximum financial opportunity. Time and time again, markets bottom out when ordinary people have abandoned them.

This is exactly what we’re seeing in Bitcoin (BTC/USD). The hype that surrounded the cryptocurrency almost a year ago is completely gone. The interest over time, when looking at google trends, is at its lowest in 12 months. More importantly, many people believe that it can go significantly lower.

Current market sentiment maybe depressive but the charts show that the end is almost near. In this article, we show how Bitcoin may be transitioning from depression to disbelief.

A Comparison of Market Cycle Psychology Chart and Bitcoin Chart  

Disbelief is the state where the market shows signs of life but participants ignore them. They do so because they think that the downtrend is not yet over and the rally is just another pump and dump scheme to slaughter newbies.  

We believe Bitcoin is getting ready to make you a non-believer. To understand why we have this point of view, allow us to first show you the market cycle psychology chart.     

Market cycle psychology chart (Source: Steemit)

Disbelief comes after a boring and depressed market. If you’ve been following Bitcoin’s price action since September, you’d know that the past few months have been the longest. Volatility has been almost non-existent. There were times when Bitcoin traded within a $10 range. At that point, we knew that Bitcoin was in a state of depression.

If you’re skeptical, the next chart should help alleviate your concerns.

Bitcoin daily chart over market cycle psychology chart

We overlayed the Bitcoin daily chart on top of the market cycle psychology chart and we have an almost perfect representation of market sentiment over the last twelve months.

Currently, the market is so depressed that it is flatlining. This is not a bad sign. On the contrary, we believe that it is the deafening silence before the loud roar. We have the charts to back up this view.

Inverted Chart Resistance Confirmed

On November 2, we published an article showing that bears are exhausted. In that piece, we introduced the inverted Bitcoin chart and revealed how it broke out of the rising wedge. Back then, however, we needed a confirmation. Bitcoin must successfully complete the retest to validate the breakout.

It looks like the confirmation is in the bag.

Inverted chart of BTC/USD

Bitcoin firmly rejected the candle when it tried to reclaim the support. On top of that, the bounce was so weak that it failed to touch resistance of $6,150. These price movements appear to be the prelude of a waterfall event. This inverted chart will go down and when it does, it will go down hard. This is why we believe that the prelude that we’re in right now is the transition from depression to disbelief.

Bears Have Tapped Out

Another solid reason why we believe that Bitcoin is preparing for a strong bounce is that bears have given up. They waved the white flag and are looking to hibernate for the foreseeable future.

Looking at the BTC shorts chart (BTCUSDSHORTS), it appears that bears have abandoned their posts. They have flipped three crucial supports into resistances. Even if a bounce is in order, it will likely be far from a mighty roar. We expect it to be nothing more but the final whimper of a dying animal.

BTC Shorts

Bottom Line

Bitcoin may be flatlining now but we believe that it is the silence before the roar. With bears tapping out, it is only a matter of time before bulls take the stage and rampage with a vengeance.

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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3.8 stars on average, based on 311 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Altcoins

Ethereum Price Analysis: ETH/USD Sellers are Stepping Up Downside Pressure; Explosive Breakout is Imminent

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  • ETH/USD is very much close to a breakout of the recent range-block formation.
  • Diar reports that on-chain transaction value on the Ethereum network was seen at an all-time-high in December 2018.

Over the past three sessions for ETH/USD, a pick-up in downside intensity has been demonstrated by the market bears. The price had been moving within a narrowing range-block formation for going on 12 sessions, but this appears to be coming to an end. Sellers are stepping up the pressure, looking for a breakout of the sideways movement seen of late.

Ethereum On-chain Transaction Value at All-Time-High

Source – Diar

Diar in their latest report detailed that on-chain transaction value hit an all-time-high on the Ethereum network. Diar provide weekly institutional publications in addition to data analysis of digital currencies. Further within this latest publication, the on-chain transaction levels had hit 115 million in December 2018. This marked an all-time high, which excludes the activity after a hard fork caused by the DAO hack in 2016.

In terms of monetary value, Diar stated that the total US dollar value on-chain last year was seen at $815 million. This was down from the previous $1.1 billion, reported in 2017. As a result, this was a 97% drop in the on-chain transaction value. The drop from peak in January versus December 2018 was “by and large the cause of an 80% drop in Ethereum’s price”.

Commenting on fees, Diar detailed that they are unlikely to have been a laggard on the growth for the Ethereum network. It already has some of the lowest fees that are observed for transacting on-chain. They added, “the Constantinople upgrade, now pushed back, will bring down fees a great deal further for certain types of transactions that would allow for better storage use”.

Technical Review – ETH/USD

ETH/USD daily chart.

Key daily support eyed around $117.50 has been penetrated in the past few sessions. Signs are starting to show of a gradual shift again in favor of a bearish bias. The price is running towards its third consecutive session in the red, with the critical support earlier detailed under threat. ETH/USD did have a quick spike of around 15% lower on 20th January before retracing back within the range-block. A firm breach and close of the mentioned $117.50, the lower part of the range-block, could be punishing. Eyes will then be on a retest of the big psychological $100 mark.

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 112 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Crypto Update: Coins Settle Down After Weekend Pump & Dump

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While crypto bulls had something to cheer about early on during the weekend following a rally attempt in the majors, the move once again failed to improve the technical setup in the segment, and the top coins quickly gave back their gains. Now, most of the coins are trading near the bottom of their short-term ranges and technicals continue to point to the continuation of the bear market.

Correlations are still very high, there is no sign of a developing bullish leadership, and with none of the key coins showing bullish momentum, bulls are facing strong headwinds. While trading volumes and volatility remain relatively low thanks to the range-trading environment a move below primary support could trigger larger moves in the majors soon.

The negative long-term trends are still in no danger, and although there is still a slight chance of a failed break-down pattern to develop in the market, odds favor a bearish short-term outcome as well. With that in mind, traders and investors still shouldn’t enter positions here, with our trend model being on sell signals on both time-frames in the case of the majority of the coins.

BTC/USD, 4-Hour Chart Analysis

Although Bitcoin is still relatively stable compared to its most important peers, it gave back all of its weekend gains and fell back below the key $3600 support/resistance level yesterday. Now, BTC is threatening with a break-down below the prior sing low, and given the recent weakness, our trned model is now on a short-term sell signal.

While bulls could still be saved by a move above $3850, the failed rally attempts warn of selling pressure, and a bearish continuation is more likely here. Further strong resistance is ahead between $4000 and $4050, with support zones still found near $3250 and $3000, and traders should still not enter positions.

ETH/USD, 4-Hour Chart Analysis

Ethereum shoed relative weakness during the rally attempt this weekend, and it is now very close to a break below the key swing low, which would likely lead to a move towards the key support zone between $95 and $100. The coin remains on sell single son both time-frames, and with a test of the bear market low near the $80 price level seems likely in the coming weeks.

Strong resistance is ahead just above the current price level and near $130, with further zones at $145, $160, and near $180 while a weak short-term support is found near $112, and the coin’s weakness is a negative sign for the whole segment.

Altcoins Still Weak Despite Rally Attempt

STR/USD, 4-Hour Chart Analysis

While none of the major altcoins broke the key short-term support levels, the overall picture remains bearish and we haven’t seen signs of resilience that would indicate a short-term bottom and the resumption of the counter-trend move.

Stellar, which has been among the bearish leaders towards the end of 2018, is once again showing relative weakness while following the trends in the broader market, should the coin violate the $0.10 level, a quick to new bear market lows would be likely, with the $0.09 level being the only lone of defense for bulls.

XRP/USDT, 4-Hour Chart Analysis

Ripple still seems very fragile from a technical standpoint, and a move below $0.30 looks inevitable in the coming weeks, with a likely test of the bear market low near $0.28. The $32 support/resistance level remains in focus, but given the weak rally attempts and the bearish long-term setup, we don’t expect the coin to get back to the $0.3550 level in the coming period.

Our trend model is still on sell signals on both time-frames, with further strong support found near the $0.26 level, with resistance ahead near $0.3750, and in the key long-term zone between $0.42 and $0.46.

LTC/USD, 4-Hour Chart Analysis

Litecoin is back near the key $30-$30.50 support zone after the volatile weekend, and it also looks ready to dip below that zone, even as the short-term trading range is still intact. The steep long-term downtrend is intact despite the recent counter-trend move, and traders and investors shouldn’t enter positions here, with the short-term setup also being bearish. Strong resistance is ahead near $34.50, $38, and $44 with further support found near $26 and $23.

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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4.7 stars on average, based on 445 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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Altcoins

GBP/USD Price Prediction: Bulls Reclaim 1.2900, Eyes Locked on Another Retest of 1.3000

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  • GBP/USD bulls pick up momentum to the upside, following generally positive tone to Theresa May’s Plan B statement.
  • Next upside targets for the bulls should they firmly breakdown 1.2900 again, will be the psychological 1.3000 mark.

GBP/USD throughout the session on Monday remained very much elevated. This came as market participants were somewhat maintaining an optimistic view. All of which heading into the British Prime Minister Theresa May’s speech to the House of Commons, on her Brexit plan b. Of course, this had to be drafted again, given her humiliating defeat at the vote last week, on the initial EU withdrawal plan.

Theresa May Plan B

In terms of her details this time round, she will be going back to Brussels, to seek some amendments to her initial agreement. This needs to be done in order to get a plan through another vote in the commons. Looking at some of the GBP bullish takeaways from this statement; she guaranteed rights for EU citizens at several angles, scraping the application fee EU nationals registering in Britain, discussing the backstop with the DUP this week.

To conclude, PM May appears keen in her language to ensure of a soft-Brexit, rather than one that is hard. All of which supported GBP in its push to session highs, at the time, briefly moving back above 1.2900. The price had given up this area on 18th January, when the bears were reversing the run observed on 17th, where GBP/USD touched to big psychological 1.3000 mark again.

Technical Review – GBP/USD

GBP/USD 60-minute chart. Near-term resistance eyed at 1.2900, with bulls locked in on a retest of 1.3000.

GBP/USD at the time of writing continues to trade around the 1.2900 territory. This price did see a brief period cooling, on touted profit-taking post the statement. Near-term resistance can be seen within this price region, but if convincingly broken down again, then there is decent upside potential. Aside from the supply observed here, there isn’t much in the way of the 1.3000 price region.

Given the renewed optimism around Brexit now, this has assisted in maintaining momentum to the upside for GBP. In terms of support to the downside, a strong area of demand should be noted at 1.2850-25 price region. As can be seen via the 60-minute chart view, this has supported the price since 15th January.

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 112 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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