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Analysis

Crypto Update: 5 Altcoins to Watch This Week

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Four out of five of the altcoins that we included on last week’s list moved within our expectations. Ethereum (ETH/BTC) and NEM (XEM/BTC) have managed to stay above key support areas. In addition, Binance Coin (BNB/BTC) and 0x (ZRX/BTC) have maintained their bullish tone. Only Bitcoin Gold (BTG/BTC) disappointed as the market took out its key support.

For this week’s edition, we look at altcoins that are prime candidates for buying on dips. Here are the five altcoins to watch this week.

TRON (TRX/BTC)

TRON started the year on a high note as it breached 0.0000056 resistance on January 3, 2018. This triggered a strong rally that sent the market to as high as 0.00002047 on January 5, 2018. Although the market has been correcting since, we now have an idea where TRON might be headed. A look at the 12-hour chart shows that it is forming a falling wedge.

TRX/BTC 12-hour chart

If our read is correct, TRON might bounce off 0.0000056. This would allow the market to flip the resistance into support. Otherwise, a move below this level will likely send TRON down to 0.0000045.

Steem (STEEM/BTC)

Steem had a strong week as it rallied from near the range low of 0.0000675 on January 14, 2019 to take out the range high of 0.0001 on January 18. The market then flipped the resistance into support on January 20. This is awesome bullish price action.

However, the market looks overextended as the 12-hour RSI is flashing a bearish divergence. This should give you the chance to buy on dips.

STEEM/BTC 12-hour chart

If the market corrects, you can rely on the 200-MA on the 12-hour chart as a possible bounce area. Should the market move below the indicator, it has a support level at 0.0000888.

WAVES (WAVES/BTC)

To say that Waves ended 2018 strong would be an understatement. It grew by over 400% rallying from the low of 0.0002336 on November 21 to as high as 0.001209 on December 19. The market has been pulling back since. However, we are starting to see signs of a possible bounce.

Currently, Waves appears to be finding support at 0.0006842, which is the 61.8% Fibonacci level of our range. Also, the market has printed a double bottom pattern on the shorter time frames. Plus, we can see a bullish divergence on the 12-hour chart.

WAVES/BTC 12-hour chart

A bounce at the 61.8% Fibonacci level might send Waves all the way up to the range high of 0.0009645. Otherwise, it might fall back to the range midpoint of 0.0005979.

Dash (DASH/BTC)

Dash is one of our two bottom picking targets this week. It is currently creating a falling wedge on the 12-hour chart. It appears to be on its final wave down.

DASH/BTC 12-hour chart

If our read is correct, Waves will establish a bottom around 0.016. Put tight stops if you’re planning to go long on the market because there’s no known support below 0.016.

Wanchain (WAN/BTC)

Our second bottom-picking target is Wanchain. Just like Dash, it is forming a falling wedge on the 12-hour chart. It also appears to be on its last leg down.

WAN/BTC 12-hour chart

We expect Wanchain to bottom out at 0.0000775. Use tight stops as well if you’re considering to bottom pick Wanchain. Similar to Dash, WAN/BTC has no known support below 0.0000775.

Bottom Line

While Bitcoin continues to trade sideways, this gives many altcoins the opportunity to pump. TRON, Steem, and Waves have done so and that’s why we’re looking at them this week. On the other hand, Dash and Wanchain appear ready to bottom out. As always, use tight stops when buying on dips.

 

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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3.8 stars on average, based on 326 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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2 Comments

  1. sleepypete

    January 22, 2019 at 3:58 am

    I’ll hold back on a rating as I haven’t investigated all the crypto pairs listed in this article. However, it bears mentioning that the last 3-4 articles on Hacked regarding TRX have all been failed predictions; it broke out if the “falling wedge” listed in this article. Any insight as to why it continues to eclipse projections?

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Analysis

The “Accessibility Premium”: How Coinbase’s Overseas Expansion Could Affect Crypto Prices

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The accessibility premium refers to the affect on a cryptocurrency’s price when it is added to Coinbase. The $8 billion valued exchange is now looking to expand beyond its U.S-based institutional trading business to offer institutional services worldwide. Bitcoin, Bitcoin Cash, Ethereum, and Litecoin may end up being the greatest beneficiaries. These cryptocurrencies could gain from increased accessibility; the new “Coinbase Effect”.

In 2018, as the exchange added more cryptocurrencies, some writers wrote about a perceived “Coinbase Effect”, like Ari Paul. They theorize about an “accessibility premium”, in which those crypto-assets that are more accessible rise in price. With Coinbase bringing crypto to worldwide investors, it could bolster demand for those coins that are listed on the San Francisco-based “Goldman Sachs of Crypto”. They would be more accessible. When a new cryptocurrency or token hit the exchange, traders might expect a bump in price. 

On May 3, 2017 Coinbase integrated Litecoin, resulting in a 30% increase in the price. When Coinbase listed Bitcoin Cash on December 19, 2017, trading on global exchanges skyrocketed. Bitcoin cash closed at $4,000. Two days prior, its price had been $2,200. Volume increased from $2.5 billion on December 18 to nearly $12 billion on December 20 for a 380% increase.

Coinbase added Ethereum on July 21, 2016, resulting in a modest 14% rally. Things changed when Brave browser’s token, BAT, launched on Coinbase. It declined in price. Further data is needed to know the truthful dynamics. By the time BAT was listed, the price of crypto had long since started a consolidation, leaving sentiment low.

Fast forward Q1 2019, and Coinbase is expanding overseas. It is laying down infrastructure for the long-term as it looks towards Asian markets, amid moves to attract international institutional money to cryptocurrency trading. (Coinbase’s product GDAX offers US-based institutional trading) New traders might find Coinbase’s familiarity welcoming. Higher volumes would be to expected for the cryptocurrencies offered by the Silicon Valley giant. 

So, the popular exchange is undergoing an extensive expansion. Coinbase customers residing outside of the U.S. can now trade without a domestic bank account. This could be a boon to the prices of cryptos offered by Coinbase, led by Bitcoin.

There has been discussion about the correlation between simplicity and demand. Opinions on the effect ease of use has on demand are not entirely aligned. As Donald Norman says in his book “Living with Complexity”:

… the so-called demand for simplicity is a myth whose time has passed, if it ever existed.

Make it simple and people won’t buy. Given a choice, they will take the item that does more.

Features win over simplicity, even when people realize that features mean more complexity. You do too, I’ll bet. Haven’t you ever compared two products side by side, feature by feature, and preferred the one that did more? …

Would you pay more money for a washing machine with fewer controls? In the abstract, maybe. At the store, probably not.

Ultimately, Norman argues for managed complexity. But, the demand for simplicity – or at least clarity – seems logical in a chaotic, complex world. In a blog on their website called “The Customer Demand for Pervasive Simplicity”, Cisco writes of this perception, and how it tailors its products towards this end.

A bastion of crypto-simplicity, Coinbase has long courted institutional investors in the U.S., but now its targets are clearly set on a global institutional book. The stage is set for crypto’s first truly global exchange, though Coinbase will need to first successfully assimilate into new countries, with their unique business practices languages, laws, and regulations. Currently, differing regulations in different countries keep crypto’s exchange ecosystem quite regional.

Coinbase holds 5 percent of all bitcoin, 8 percent of all ethereum, and 25 percent of all litecoin in circulation in cold storage. Its success overseas would likely underpin their prices if the “accessibility premium” holds true.

Marcus Hughes, recently appointed as lead counsel for Coinbase in the United Kingdom, has been tasked with overseeing cross-border expansion: “Coinbase takes the long view on bitcoin and wider cryptocurrency prices,” Hughes said, “We need to move beyond the speculation phase of bitcoin and cryptocurrency to the utility phase.”

He added: “The utility phase will mean bitcoin and crypto becomes more widely accepted and understood.”

This solidifies bullish sentiment from the exchange which will be strengthened should it be successful in its bid to attract ‘big money’, not just from a core user base in the U.S. but also from thriving crypto markets in countries such as Japan.

Coinbase reports that, “In the past twelve months, hundreds of crypto-first hedge funds have launched around the world, and many hundreds more traditional institutions have begun [actively trading digital assets]. High-volume clients across Asia will now have access to Coinbase’s flagship trading platforms for institutions. As part of this rollout, we now support inbound and outbound international (SWIFT) wire transfers, allowing Coinbase clients in Asia to fund their accounts from non-US bank holdings.”

Coinbase predicts a bright future for digital currency in Asia, it says, and looks to enter into a market that could help it to cement a role as one of the global leaders in crypto trading. But there remains a big question mark over cryptocurrencies, prominently over how regulation is going to play a role.

Marcus Hughes opines that this year will see a “massive change” for global bitcoin regulation. He says that Europe will gradually lead the way out of a “crypto winter” into regulated digital currency markets with more potential for long-term stability. But, in the short term, irrational trading might paint an entirely different picture. 

As we see Coinbase invest in the long-term it bolsters confidence in a currently inhospitable climate for bitcoin. Should prices continue to fluctuate market sentiment may dip, but it is the notion of institutional money that may serve to give cryptocurrency markets much-needed price stability. 

Image: David McBee, Pexels

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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5 stars on average, based on 1 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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Analysis

Ethereum Update: Bottom Already Reached

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To say that Ethereum (ETH/USD) had a bad 2018 would be a huge understatement. After climbing as high as $1,424.3 in January 2018, the market quickly reversed. 11 months later, Ethereum recorded lows of $83 on December 7, 2018. In other words, the 2018 bear market has devalued Ethereum by over 94%.

While this is disastrous to investors who bought positions prior to the December 7 low, we are inclined to think that the worst is behind us. We’ll even go as far to say that Ethereum will not be making new lows anytime soon. In this article, we explain why the bottom is most likely already in.

Volume Upticks Show Capitulation

One of the reasons why many retail traders fail to catch the bottom is because they’re too focused on price action. They look at the chart and formulate their bias by trying to figure out the current structure or even candlestick pattern. Many fail to include volume in their analysis when in fact, it is the most reliable indicator of a market that’s bottoming out.

When an asset is in a downtrend, a significant volume surge over a fairly short period of time is a strong sign that participants have capitulated. In other words, retail traders have given up hope on trying to recoup gains that they sell their positions at a loss. This inspires a massive panic selling causing an asset like Ethereum to nosedive. We saw this happen on the week of November 19, 2018.

Ethereum volume uptick

During that week, Ethereum printed its largest volume in its history on Bitfinex. Volume stayed significantly elevated for six more weeks. This more than meets the usual criteria for capitulation.

Capitulation Requires Tremendous Capital  

When a market capitulates, the asset is transferred from the hands of the dumb money (retail) to the hands of the smart money (institutions or whales). While this may sound familiar to most retail traders, what many fail to realize is that it takes tremendous resources to keep the price of an asset like Ethereum from spiraling out of control during this period.

To get a better understanding of this argument, let’s look at the volume printed on Bitfinex from

November 19 to December 7:

Week 1 (November 19)

  • Volume = 6.072 million ETH units
  • Range High = $178.99
  • Range Low  = $102.96

Week 2 (November 26)

  • Volume = 3.585 million ETH units
  • Range High = $127.87
  • Range Low  = $102.2

Week 3 (December 3)

  • Volume = 3.97 million ETH units
  • Range High = $117.53
  • Range Low  = $83

(Median Range/Price: $130.995)

Over this three week period, the smart money had to absorb selling pressure to the tune of 13.627 million ETH units. If you multiply this by the median price of $130.995, that’s a mind-blowing $1.785 billion! Whales had to commit such an amount to keep prices from falling further. Even for rich people, this is a huge investment.

If you’re a savvy investor, the only reason you would invest such a huge amount of money is the promise of generous returns.

Absorption Translates to Market Control

If you’re a whale and you bought $100 million worth of Ethereum at $150, your investments are down by 17.33% at current market levels of $124. In other words, you are in the red for $17.33 million. To an ordinary investor, this is unacceptable. However, the smart money can tolerate such a tremendous loss because they have assumed significant control of supply. This is the primary reason why we believe that the bottom is already in.

As mentioned, it took tremendous resources to keep Ethereum above $83. On top of that, it took the smart money an additional 11 million ETH units to pump the market from $83 to $163 between December 10 – December 24. All in all, the smart money has likely accumulated about 24 million out of the 104 million ETH units in circulation between November 19 – December 24.

Ethereum is a market that trades a daily average of over 200,000 ETH units. If you were to control millions of ETH units, you could trigger dumps and pumps at any given moment.

Average daily trading volume of Ethereum

Right now, it makes sense from a whale perspective to pump the market to around $200 and protect that level. By doing so, the smart money will ensure that their investments are in profits. More importantly, the price action will attract retail traders and generate bullish sentiment. Once the fear of missing out sets in, Ethereum will likely pump on its own and generously reward those who invested at the bottom.

Bottom Line

The significant volume upticks between November 19 – December 24 convince us that the bottom is already in. The smart money have accumulated a sizeable portion of the current Ethereum supply such that they may be able to trigger dumps and pumps anytime. Having this control enables them to pump the market to around $200 to protect their investments, lure retail money, and generate profits in the future.

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.

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 326 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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Analysis

3 Things You Need to Know About the Market Today: Extended Trade Talks, Economic Data Dump, National Emergency

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1, Trade Talks to Continue Next Week in Washington

S&P 500 Futures, 4-Hour Chart Analysis

The news of the day, so far, is clearly the unexpected extension of the current round of trade talks between the US and China. The negotiations will reportedly continue next week in Washington, and that could mean that some kind of formal agreement is already in the works. We expected, at least, and extension of the March 1 deadline, and although the rumors were pointing to that earlier on this week, the current state of the talks is even more positive for bulls.

That said, the mature global risk rally only managed to grind on, with the key markets missing real bullish momentum this week. The S&P 500 yet again hit marginal new recovery highs today, but the MACD indicator is clearly showing weakness, despite the week’s positive new flow, and as the Volatility Index (VIX) hasn’t been confirming the move either, we are sticking to our defensive stance towards equities here.

2, British Retail Sales Beat as US Consumer Confidence on Tap

FTSE 100 Index CFD, 4-Hour Chart Analysis

While the Great British Pound has been weak amid the continued Brexit-related uncertainty, with the weakening economic numbers also weighing on the currency, British equities have been outperforming in the meanwhile. Today, we had the first major positive economic surprise in a long-time from Europe, as the British Retails Sales Report was much better-than-expected, coming in at 1.0% vs. the consensus estimate of 0.2%.

The FTSE 100 hit its highest level since early October today, boosted by the weakening but still ongoing global risk rally and the weakening currency. Stock investors don’t seem to be concerned by the prospect of a no-deal Brexit, despite the apocalyptic forecast by the Bank of England and the anti-Brexiters.

The GBP barely budged following the strong retail sales data, and the GBP/USD pair is near its recent 1-month lows amid the Dollar’s broad push higher. US Industrial Production came in at -0.6% missing the consensus estimate of 0.1% by a wide margin, while the Empire State Manufacturing index was slightly better-than-expected. The day’s most-awaited US report is due to come out after the bell and analysts expect a slight uptick to 93.3 after the huge drop in the measure in December.

3, Dollar on the Verge of Break-Out as Trump to Declare National Emergency

Dollar Index, 4-Hour Chart Analysis

After some consideration, the President decided to sign the bill on border security that removes the immediate risk of a government shutdown. On the other hand, Mr. Trump will also reportedly declare a national emergency to secure additional funding for the Wall and the Democrats are already considering legal action to fight that decision.

As for the effects on markets, the fact that a second government shutdown is off the table boosted equities and the dollar today. Even though, we don’t think that the Border Wall saga is over and we are likely already deep into the 2020 campaign. With that in mind, we expect a ‘light’ legislative schedule for the coming two years, with the legislative gridlock giving a great chance to the Democrats to tackle President Trump ahead of the elections.

We have been tracking the Dollar’s rebound ever since the Fed meeting, and while the key resistance zone near 97, which roughly corresponds with the support zone between the 1.1250 and 1.13 in the EUR/USD, is still intact, a break-out to new multi-year highs looks more and more likely. The momentum of the short-term move could lead to a major break-out following the lengthy consolidation period, but we could still see volatility in the current trading range due to the several failed break-out attempts in recent months.

ChartBook

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Forex

EUR/USD, 4-Hour Chart Analysis

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EUR/GBP, 4-Hour Chart Analysis

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Commodities

WTI Crude Oil, 4-Hour Chart Analysis

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Copper Futures, 4-Hour Chart Analysis

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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4.7 stars on average, based on 464 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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