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Despite Month-Long Rally, Cryptocurrencies are Not Brimming With New Buyers

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If Google search trends are a proxy for consumer demand, bitcoin and other cryptocurrencies have yet to recapture the attention of new adopters. In fact, interest in cryptocurrency declined last week to the lowest level since October, a strong sign that the latest buying spree was driven almost entirely by existing market players.

What Google Search Trends Reveal

Cryptocurrencies have generated nearly $200 billion in additional market cap over the last four weeks, but new adopters appear to be absent from the rally. Data from Google reveal that searches for keywords like “bitcoin” and “cryptocurrency” have steadily declined since mid-February, with the downtrend continuing even as digital assets rebounded.

As of  May 5, search word “bitcoin” had a trending score of 12 on a scale of 1-100 where higher readings are associated with higher interest. To get a sense of just how far “bitcoin” has fallen, consider that the keyword had a perfect score of 100 in the week leading up to Christmas.

Interest for bitcoin is depicted in the following chart, which was taken from Google Trends:

The “cryptocurrency” search term has followed a similar downtrend since peaking at 100 in late December. As of Saturday, the term had a score of 17, which was also the lowest since October.

Assessing Demand

Much of the attention paid to cryptocurrency over the last week has centered on growing institutional adoption. Hacked reported May 3 that Goldman Sachs was in the formative stages of launching its own cryptocurrency market through bitcoin futures contracts. The bank will serve Wall Street in a market-making capacity where institutional investors can gain exposure to the digital asset using traditional derivatives products.

While institutional demand has been regarded as the next major step for cryptocurrencies in their path to mainstream adoption, some analysts have underestimated the role of new buyers in propping up the market. Google search trends reveal an undeniable correlation between consumer interest – perhaps even curiosity – and the underlying performance of the cryptocurrency market. In other words, when consumer interest was highest, so was the market.

Of course, the correlation isn’t perfect. The month-long recovery in crypto prices has not been met with a commensurate rise in search traffic. Then again, this is what leads us to believe that the veterans are largely responsible for the rally.

But new adopters are absolutely needed to keep crypto prices trekking higher and their absence can generate lethargic price action for the foreseeable future. That’s the general outlook of Nick Colas, a prominent Wall Street analyst who has been covering cryptocurrencies for quite some time.

In a recent interview with CNBC, Colas cited Google search and cryptocurrency wallet growth in concluding that fewer people are buying bitcoin for the first time. In his view, real world adoption of crypto assets goes far beyond what the institutions are doing. Although bitcoin futures and ETFs matter, what the average Joe is doing matters even more.

“Like any new technology, you need new adopters to come in to make it more valuable.” Colas said in the interview. “Then, we have a solid trek higher. Then, interest will reengage.”

Colas concluded that bitcoin and the overall market could trend sideways until we see the return of newcomers to the market. In his view, this could take up to five years to materialize.

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 692 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Crypto Update: Weekend Bounce Fails to Turn Bearish Tide

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The major cryptocurrencies continue to be stuck in declining trends, despite the bounce that followed the latest technical breakdown in the segment. The top coins failed to recover above the prior bear market lows sustainably, and today, the market turned lower again, with the weakest currencies already threatening with new lows.

The long-term picture remains overwhelmingly bearish, and out trend model is negative across the board, with only Bitcoin showing relative stability, still holding up near its prior low. There is no sign of bullish momentum among the majors and traders and investors should remain defensive here, until at least a short-term trend change, as despite the negative sentiment and the deeply oversold broader picture, odds still favor new bear market lows in the coming period.

BTC/USD, 4-Hour Chart Analysis

Bitcoin bounced back after last week’s breakdown and tested the $3600 level before turning lower again. Since the coin failed at the key level, the short-term sell signal in our trend model remains in place, together with the clear long-term sell signal.

A move towards the long-term support zone near $3000 remains likely, and traders still shouldn’t enter new positions here. The coin is well below the key $4000-$4050 zone, and the short-term downtrend is still intact, despite the recent rally attempts.

ETH/USD, 4-Hour Chart Analysis

Ethereum is also stuck below the prior bear market low and the key 95-$100 support zone, similarly to Bitcoin, and although the coin is not showing clear relative weakness anymore, it is still bearish on both time-frames in our trend model, with the steep downtrend being intact.

New lows are still likely in the coming weeks, and traders and investors should stay away from the coin Strong resistance above the primary zone is ahead near $120, $130, and $150, while long-term support is found in the $73-$75 zone.

Bearish Leaders Remain Weak

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to be relatively weak from a short-term perspective and the coin is hovering near the $0.30 following the failed rally attempts, which were capped by the $0.32 resistance level. The coin is on sell signals on both time-frames due to the recent weakness and technical breakdown, and a test of the bear market low near $0.26 now seems likely. Primary support is now found at $0.28, with further resistance levels ahead at $0.3550 and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

Litecoin is also showing relative weakness, despite its brief period of strength in November and the coin is trading just above the next major support zone which is found near the $23 price level. The steep long-term downtrend is clearly intact and our trend model bearish both time-frames, and new lows are likely in the coming days, with strong resistance ahead near $26 and between $30 and $30.50.

Monero/USDT, 4-Hour Chart Analysis

On another negative note, the bearish leaders are still not showing signs of stability, barely bouncing off their lows during the broad rally attempt. Monero is still among the weakest majors, and the coin looks ready for another leg lower, with last week’s breakdown clearly being intact.

We expect the downtrend to continue in XMR and the other relatively weak coin, and traders shouldn’t enter even new positions here, despite the oversold long-term momentum readings in the segment.

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 412 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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Analysis

Crypto Update: 5 Altcoins to Watch This Week

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Bitcoin had another rough week. As a result, altcoins that were included on last week’s list either dumped or stayed close to support. Nevertheless, having a clearly defined range enables you to quickly react when an altcoin either goes below the support or breaches the resistance. You can form expectations as to where the market might go next.

We’ll do more of the same this week. Here are five altcoins to watch this week.

Waves (WAVES/BTC)

Waves pumped hard last week. It climbed as high as 0.0005965 on December 4 from a low of 0.0002336 on November 21. If you failed to ride the early stages of a huge rally, the next best thing is to wait for the pullback.

Daily chart WAVES/BTC

Waves appears to have retested resistance of 0.0004715. It is also in overbought territory so we can expect a deeper retrace this week.

A good pick up area would be between 0.000352 and 0.0003835. These are solid weekly support areas. On top of that, the 200-day moving average is moving around those levels.

If Waves moves below 0.000352, it is likely that there will be a full retrace back to 0.0002336.

EOS (EOS/BTC)

EOS breached range support of 0.000697 on December 1. Considering that the market had been relying on this support since August 14, the breakdown sparked panic selling. Participants who bought within the range raced to dump their positions. As a result, the market nosedived to 0.0004721 on December 7.

Daily chart EOS/BTC

With this breakdown, EOS is now trading within a new range. The range low is weekly support of 0.0005021, midpoint is 0.0006015, and the range resistance is 0.000697. You know the drill: to trade this range, a trader needs to buy the support and sell the resistance.

Bitcoin Cash (BCH/BTC)

Bitcoin Cash (BCH/BTC) has been feeling the effects of gravitational pull after a glorious first week of November. The meteoric rise to 0.098035 on November 7 is now being met by a massive dump. So far, the market is en route for a full retrace. That’s perfect for those who want to play the range.

Daily chart BCH/BTC

0.06815 is a good pick up point if you’re looking to bottom pick the market. However, don’t immediately buy the drop because there’s a chance that market makers will push prices further down to liquidate range low buyers. Instead, wait for Bitcoin Cash to retest the support on the 1-hour chart. This should increase the likelihood of a strong bounce.

Republic Protocol (REN/BTC)

Republic Protocol (REN/BTC) has the makings of the next Ravencoin (RVN/BTC) in terms of price action. The market skyrocketed to a high of 0.00000838 on December 9 from a low of 0.00000551 on December 8. That was an increase of over 52% within 24 hours.

As expected, the pump was followed by a pullback. This is where it gets interesting for us.

1-hour chart REN/BTC

For REN to continue its bullish sentiment, it must recover support of 0.0000704. That should give the market the momentum to test 0.00000816 resistance. On the other hand, a breach below immediate support of 0.00000672 is bearish. It can lead to a full retrace to 0.00000551. If that happens, you can always bottom pick the market.

YOYOW (YOYO/BTC)

YOYOW is the last coin in our altcoins list. From a low of 0.00000290 on September 12, YOYOW (YOYO/BTC) had a beautiful run that saw the market climb as high as 0.00000755 on November 2, 2018. That’s an increase of 160% in less than three weeks. If you see a move like this in a bear market, expect a dump to ensue. That’s exactly what happened.

Daily chart YOYO/BTC

With this dump, the market’s current range is between 0.00000290 and 0.00000550 with a midpoint at 0.00000420. YOYO made it on this week’s list because it just retested the midpoint. The price action makes it very likely for the market to revisit the range support. If the support holds, YOYO/BTC would form a triple bottom structure.

Bottom Line

With Bitcoin printing new lows last week, this week’s list involved altcoins that are ripe for bottom picking. If you’re planning to trade one or more of these coins, you can follow the range that we’ve put together for you. As always, consider buying the support and selling the resistance.

 

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 286 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

Litecoin Price Analysis: If Current Demand Zone Fails to Hold Then Next Stop is $3

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  • LTC/USD is at serious danger of another hard fall should the range-block seen be breached.
  • Back in December 2013, the price was at current levels and fell down to $1 over a two-year period.

Litecoin has been heavily weighted to the downside of late. The selling pressure intensified through the month of November. This month, December, has seen the pace of that bearish trend intensify. As a result, LTC/USD is trading at its lowest levels seen since May 2017. These moves of course are very much in-line with the rest of the market that has been in decline since the back-end of 2017 – start of 2018. Litecoin is down well over 90% from the start of this decline.

Deadly Range-Block

LTC/USD 4-hour chart

LTC/USD was allowed some time to breath after the chunky pressure south, through November. The price stabilized from 25th November, to then move into range-trading. This was the case right up until 6th December. Confined within a range-block, which technically trend to occur after such excessive movement, to then be resumed in that original aggressive trend of direction. The most recent, moving between a low of $29 to a high of $36, ahead of the firm breach lower on 6th December. This resulted in the price moving down to another fresh low of $22.55, on 7th December.

Once again, a similar observation can be seen via the 4-hour chart view. Since the 7th December, some stabilization has materialized. Currently it is shaping up another range-block, which is subject to a further extensive move to the downside. The low within this new formation, can be seen around the $23 mark; to the upside, this is capped at $28. A breakout south from this block could catastrophic and much more damaging than the prior. There isn’t much in the way of support for quite some way lower, should the price not be able to defy the odds and break higher from the block.

Downside Targets

LTC/USD weekly chart

Should the bears maintain the current course of downside, then the lower support of the current range will be broken. As an extreme target south, eyes could be on a complete reversal of the 2017 bull run. This could see another 500% drop, this of course being a worse case scenario for LTC/USD. Given how fast the bulls ran up to the north, it can come back down just as hard. Back in December 2013, the price was around current levels within the $20 territory. The bears pushed for a hard fall of over 200%, down to $1 territory, over a two year period.

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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4.5 stars on average, based on 78 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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