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Analysis

Cryptocurrency Rally Continues as Ethereum and Bitcoin Shine

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The major cryptocurrencies got bought aggressively following the weekend liquidation, and the most valuable coins rallied back above their prior high, giving the first confirmation of a possible long-term trend change. Bitcoin surged past $2150 and hit the key $2250 level, with the timing of the previous being almost perfectly in line with our prior projection.

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Apart from the technical position, BTC and the broader market were both boosted by the favorable developments regarding the BIP91 protocol that could save BTC from a hard fork event on the coin’s Judgement Day.

BTC/USD, Daily Chart Analysis

The coin did spike briefly below the base pattern that we have been monitoring, but the current rally should have marked the end of the correction, with the long-term picture reaching oversold territory last week. Most of the other majors and smaller coins are also sporting double digit gains from the lows, as the oversold currencies are slightly catching up to the likes of Litecoin and Dash which were holding up during the lengthy sell-off. Let’s look at the how the majors stand after the strong bounce.

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Ethereum

ETH/USD, 4-Hour Chart Analysis

Ethereum climbed above the previous low near $170 as well and rose as far as $195  today in early trading. The ETH token is still not out of the declining trend but if it can hold above the $170 level, the odds of a sustained rally are very high, given the long-term setup and the encouraging bullish momentum of the bounce.  The relative strength of the small cap coins in the last two days is also positive for the coin.

Litecoin

LTC/USD, 4-Hour Chart Analysis

Litecoin has been drifting higher since yesterday, sticking to the rising long-term trendline, and reaching up to the crucial confluence zone near $44. The short-term declining trendline and the strong support/resistance line is now just ahead of the coin and a break-out would trigger a trend change. The MACD indicator is still bullish after turning higher yesterday, and with it being right at 0, the picture is favorable for a break-out if the other majors remain bullish.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash bounced back above the key $150 after testing the rising long-term trendline during the weekend, just as Litecoin. The coin has been slightly lagging LTC since yesterday, and it’s still below the upper boundary of the declining short-term pattern, leaving the short-term picture neutral. The currency remains among the most bullish majors long-term, but it needs to gain some strength to trigger a short-term buy signal.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple is trading right at the 0.175 level after the bounce, still well inside the long-term correction pattern that has been dominant for over two months now.  Short-term traders should still avoid opening new positions until the declining trend is intact, but long-term investorsestors could add to their positions here.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

ETC has been held back by the declining short-term trendline just as Litecoin after showing considerable strength during the weekend sell-off. The key support zone around the $14 level held the coin recently, but a move above $18 would be ideal for short-term traders to have an “all clear” signal regarding a rally to new highs. That said, new positions could be opened above $16, after the higher low that the currency formed on Sunday.

Monero

XMR/USD, 4-Hour Analysis

Monero remains among the weakest majors short-term, as it still failed to rally above the prior correction low, despite the broad-based bounce so far this week. The coin is now back to the key base formation, above the $32 level, but short-term should wait for a move above $36 before and a higher low to form.

NEM

NEM/BTC, 4-Hour Chart Analysis

NEM has been showing some relative strength compared to its closest peer, Ripple, recently, but it remains in a declining long-term tredn compared to Bitcoin. The coin is getting close to the major trendline after this week’s rally, and a move above 0.000066 would trigger a long-term buy signal after forming a low neat 0.00005 last week.

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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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