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Analysis

Cryptocurrency Analysis: Litecoin Blows Through $60

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The crypto segment has a calm day so far as the most valuable coins are little changed, with a few exceptions. Litecoin and Monero are the biggest movers so far, being up by 8% and 5% respectively. Monero has been in a strong uptrend for more than a week now, while Litecoin finally broke out to a new all-time high after a fairly long consolidation period. The coin rose above $60 after clearing last week’s failed break-out top, as we expected in our long-term report over the weekend. The currency is still bullish, with the long-term momentum not being overbought yet, and the next target for the move being just above $70.

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LTC/USD, 4-Hour Chart Analysis

Bitcoin continues to trade sideways below its prior high, while Ethereum is edging higher towards $350 after leaving behind the crucial $330 resistance. Dash is retreating from its weekend highs, while Ripple is back below the $0.20 level after a volatile week, with Ethereum Classic also. NEO is also drifting lower since hitting the $40 mark, while NEM is gaining relative strength after a hectic range trading period. The total value of the segment is now at $156 billion, with BTC still holding on to its lofty gains, while the rest of the majors are making their moves one by one. Let’s see how the short-term charts look in detail after the weekend.

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Bitcoin

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still trading in a narrow range below its all-time high, with progressively declining volumes. The low-volatility environment could point to a short-term push higher, but we still expect a deeper correction in the currency after the monster rally since mid-July. Crucial support levels are found at the $4000 price level, near $3800, $3500, and $3150.

Ethereum

ETH/USD, 4-Hour Chart Analysis

ETH has been positively diverging from BTC over the weekend after a period of strong correlation and the coin is now on a new swing high, just below the $350 level. A move towards $380 is still expected in the coming period, even as the crypto rally is in its latter stages. The coin is still not dangerously overbought but new all-time highs might be out of reach during this leg up. Strong support is still found at $300 and near $285.

 

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is back near the prior swing high after touching $400 during the weekend, as the coin remains inside the rising short-term trend. The currency is clearly overbought after the huge rally, and we expect a move back below $300 in the coming weeks. Strong support is found at $300, and near $266. Investors should wait with opening new positions until the overbought condition is cleared.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple surged higher today after the deep pull-back that followed last week’s break-out. The coin remains bullish both short-and long term after the lengthy consolidation, but several strong resistance levels are still ahead. The recent high near $0.30 is the most important level to watch, while the all-time high is still far away at $0.43. Support is found near the current levels, at $0.20 and at $0.18.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic failed to move above $16 once again, as it remains the weakest major regarding the current rally. Above the $16 level, the coin faces resistance at $18 and near $23, while strong support is still found around the $14 level.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero briefly moved above $150 today but it dipped back below the previous swing high later on, warning of a possible bull trap. Traders should be cautious given the long-term overbought readings, with the short-term trendline currently near $140 providing a good stop-loss level. Short-term support is found near $125 with the further levels at $100, $80, and $68.

NEM

NEM/BTC, 4-Hour Chart Analysis

NEM has shown some signs of relative strength lately, but there hasn’t been another powerful move higher in the BTC pair so far. The broad trading range around the 0.000065 level is still intact. Strong support is found near 0.0000575 and 0.000048, while resistance is ahead at 0.000075.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO NEM is testing short-term support at $38 after failing to stay above the line-in-the-sand support/resistance zone around at $40. The coin remains bullish for now, but a sustained move below $38 would be a bearish sign. Primary support is still found near the, while above $40 another resistance zone is found near $47.50.

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Analysis

Bitcoin’s Record-Breaking Rally Continues as Prices Cross $8,100

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Bitcoin surged to new highs on Sunday, as the world’s largest crypto by market cap continued to generate bids following the cancellation of Segwit2x.

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BTC/USD Price Levels

The value of a single bitcoin reached a daily high of $8,110.59, its best level on record. At press time, BTC/USD was valued at around $8,002 for a gain of 4%.

With the gain, bitcoin’s market cap now exceeds $133 billion. That’s roughly $100 billion greater than Ethereum, the market’s second most valuable cryptocurrency.

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Bitcoin has added more than $1,100 over the past five sessions. It was down around $5,600 just one week ago.

Bitcoin Cash (BCH), a digital currency alternative that broke away from the original blockchain Aug. 1, was down 5.1% at $1,185. BTC and BCH locked horns earlier this month after the Segwit2x hard fork was abandoned.

$10,000 and Beyond?

Institutional clearing platform LedgerX has initiated its first long-term bitcoin futures option, which is set to expire Dec. 28, 2018. In setting up the option, LedgerX is assuming a price of $10,000 at the time of expiration. That’s a 25% premium on current levels.

Investors who buy the option are essentially saying they believe prices will exceed $10,000 by the time of expiration.

Bitcoin is being helped by growing institutional demand for the digital currency, as hedge funds, day traders and other mainstream investment outfits look to access this burgeoning asset class. CBOE and CME Group have each announced plans to integrate bitcoin into more conventional investment vehicles in the coming months.

The rush of institutional money into bitcoin is a sure sign that the digital asset class is becoming too big to ignore. The value of all cryptocurrencies in circulation has already exceeded $230 billion, with more than a dozen coins valued at $1 billion or more. Nine others have a market cap of $500 million or greater.

Coinbase Responds

The rise of institutional capital has also compelled Coinbase to introduce a custodial service targeted at account holders with more than $10 million in assets. This service targets hedge funds and other institutions that have remained largely on the sidelines of the crypto revolution.

In a recent blog post, Coinbase CEO Brian Armstrong announced that the new service will launch sometime next year.

“When we speak with these institutions, they tell us that the number one thing preventing them from getting started is the existence of a digital asset custodian that they can trust to store client funds securely,” Armstrong wrote.

In addition to maintaining the minimum $10 million asset requirement, institutions must pay a $100,000 setup fee to gain access tot he Custodial program. In response, institutional investors will receive assurance that their assets are secure.

The Coinbase Custody website lists broad support for bitcoin, Ethereum (ETH) and Litecoin (LTC), as well as ERC20 tokens. The ERC20 protocol has emerged as the favorite for startups launching initial coin offerings (ICOs), a controversial crowdfunding model that has already overtaken early stage venture capital.

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. 

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Cryptocurrencies

Is Ethereum Ready to Play Catch Up With Bitcoin?

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In mid-June of this year, the difference between the market capitalization of bitcoin and Ethereum had narrowed down to less than $8 billion. This had many market participants excited. They expected Ethereum to dethrone bitcoin as the leader, a move popularly termed as flippening.

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Key observations

  1. Ethereum has hugely underperformed bitcoin
  2. The chart pattern suggests that Ethereum is likely to play catch up in the next few months
  3. Stay on the long side of Ethereum to benefit from the bullish setup

However, fast forward five months and the difference in the market capitalization of the top two cryptocurrencies has increased to about $96 billion. This shows that while bitcoin has raced ahead in the past few months, Ethereum has hugely lagged behind.

However, is the underperformance about to end?

The chart pattern shows that Ethereum is likely to embark on a rally of its own that can carry it to $645 to $670 levels in the next few months. Let’s see how we arrived at these levels.

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Ethereum opened trading at $8.16 on January 1, 2017. It started its rally in March and by June 12, it reached a high of $420, an astronomical rally of about 5047%. Thereafter, it entered a period of consolidation, digesting the gains.

On the charts, Ethereum has formed a large symmetrical triangle, which usually acts as a continuation pattern. The breakout is generally in the direction of the long-term trend, or the trend that was prevailing before the pattern formed. In this case, the sharp move from January to June confirms that the cryptocurrency was in an uptrend before forming the triangle.

However, this is not a fool proof trade because sometimes the symmetrical triangle acts as a reversal pattern. Therefore, the best way to play this trade is to wait for a breakout of the triangle before initiating any trade.

Where can we take an entry?

Currently, the resistance line of the triangle is at about $378 levels, a level close to today’s intraday highs. The bears are likely to strongly defend this level. However, if the bulls breakout of $378 and manage to close above the resistance line, the trade on the long side will set up.

Different traders use different methods to confirm whether the breakout is valid or not. Some wait until price moves 3% above the breakout level, others wait for three consecutive closes above the resistance level.

However, we have observed that the best breakouts never look back, hence, waiting for three days may lead to a missed opportunity. Therefore, we can wait for a closing above the resistance line of the triangle and initiate the long positions on the following day.

The breakout can face resistance at $400 and $420. However, we expect the virtual currency to scale both these resistances and rally towards its pattern target zone of $645 to $670.

Notwithstanding, even the most reliable patterns can fail. Therefore, our stop loss will be kept at $340. We don’t want to hang on to the trade if it falls back into the triangle. We shall raise our stops to breakeven as soon as Ethereum breaks out to new lifetime highs. From thereon, we shall trail the stops higher to protect our paper profits.

Note

The chart pattern suggests a resumption of the long-term uptrend in Ethereum. However, this will not get confirmed until the cryptocurrency breaks out and sustains above $380. Therefore, please initiate positions only on a breakout and close above the triangle. Entering presumptive trades may result in losses.

Featured image courtesy of Shutterstock. 

 

 

 

 

 

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Analysis

Long-Term Cryptocurrency Analysis: Bitcoin Flirts with $8000 as Altcoin Bull Persists

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Bitcoin’s swift recovery was the main topic of the week, as the most valuable coin not just regained its steep losses, but hit a marginal new high towards the end of the period. The entire segment is experiencing capital inflows as the total value of the coins climbed above $230 billion for the first time ever after finally leaving the vicinity of the $200 billion mark.

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BTC breached the $8000 level before turning slightly lower on Friday, but despite the severely overbought daily chart, it is still trading near its all-time highs. As the long-term picture still suggests a deeper correction, investors should wait with opening new positions and traders should also control position sizes here. Key support levels are found at $7700, $7000, and $6700, while the recent key break-out level at $5000 still hasn’t been re-tested.

BTC/USD, Daily Chart Analysis

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Dash is still the most bullish altcoin from a technical standpoint, despite this week’s short-term correction, as the coin is trading above its prior all-time high, and this weekend, it looks ready to test the break-out high near $500. Support levels are still found at $400, $360, and $330, and as the long-term picture is approaching overbought territory, investors should only hold on to their positions here.

DASH/USD, Daily Chart Analysis

The other major altcoins are also mostly in bullish setups, with some of them already in the latter stages of this cycle, like Monero and IOTA, but elsewhere in the segment, there are still opportunities for both traders and investors. Let’s see the detailed long-term view.

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