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Long-Term Cryptocurrency Analysis: Bitcoin Enters Correction as Altcoins Break Out

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The segment had a very eventful week, considering the cancellation of the Segwit2x fork, the bullish moves in several of the major altcoins, the new high in Bitcoin Cash, and the late-week dip of Bitcoin that stirred up the market.

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BTC spiked higher to hit a new record high right after the Segwit2x drama, but the long-term forces got the better of the coin, and it fell more than 20% top-to-bottom, to hit a short-term low near $6300. The long-term setup remains overbought, and we expect further correction in the coming week, with support levels at $6300, $6000, $5800, and $5400. Traders and investors should wait with opening new positions, as a re-test of the previous major break-out level at $5000 is likely before the end of the deeper correction.

BTC/USD, Daily Chart Analysis

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The prospects of the major altcoins still look more promising, even after the gains of the week, although volatility will likely remain elevated thanks to Bitcoin. Ethereum and Ripple are lagging their peers in the current move, as first Ethereum Classic and Litecoin, then Monero, IOTA, and Dash took center stage.

This weekend ETC is back in the driving seat, rallying hard today in Asian trading and hitting our next major target at $18. As the bullish setups are still intact in most of the coins, let’s see how the long-term charts look in detail after the busy week.

Ethereum

ETH/USD, Daily Chart Analysis

Ethereum is still stuck in the long-standing trading range between $285 and $315, despite the two failed rally attempts above the pattern in recent weeks. Although the coin is still above the rising long-term trendline, we would like to see a confirmation of the trend soon, in order to keep the buy signal intact. The long-term MACD remains in neutral territory thanks to the sideways price action, and targets are still ahead between $330 and $350, at $380, and near $400.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin first hit our initial target at $64 after its break-out than spiked as high as $67, just to enter a volatile short-term correction towards the end of the week. Despite the strong moves the long-term setup is virtually unchanged, with the daily MACD still being in neutral territory, and the coin being among the relatively strong majors from an investment perspective. Support levels are now found at $56, $53, and $51, with further targets ahead at $75 and $82.50.

Ripple

 

XRP/USDT, Daily Chart Analysis

Ripple experienced a failed break-out from the short-term trading range amid the altcoin rally, and it fell back into the pattern on Friday, confirming the short-term relative weakness. Traders should wait for a short-term trend change before entering new positions, while investors could add to their positions, as long-term momentum is neutral. Support is still found just below $0.20, $0.18, and $0.16, while resistance is ahead near $0.22 and $0.26.

Dash

DASH/USD, Daily Chart Analysis

Dash broke out of its lengthy correction pattern and rallied past $330 but failed to pass the $360 level for now. That said, the coin remains one of the strongest altcoins, and we expect a test of the all-time high near $400 in the coming weeks. The long-term MACD is far from being overbought, and despite the likely increase in volatility, the short-term uptrend is also encouraging. Support levels below $330 are at $300 and $265.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic consolidated its recent gains in a bullish fashion during the week, attempted a failed move above the short-term pattern on Friday, but surged up to our next target at $18 today in early trading. While the lofty gains of the coin will likely lead to more shot-term corrections, ETC remains bullish on all time-frames, and a test of the $23 resistance is likely in the coming weeks, with key support levels at $16 and $13.50.

Monero

XMR/USD, Daily Chart Analysis

Monero joined its closest peer Dash and broke-out from the lengthy consolidation pattern between $80 and $100. The coin breached our primary target level near $125 before entering a short-term correction, which left the bullish move intact. We still expect a test of the all-time high near $150 in the coming period, as the long-term momentum remains close to neutral.

IOTA

IOTA/USD, Daily Chart Analysis

IOTA led the altcoin rally regarding percentage gains, as it rallied from the vicinity of the $0.35 level and reached the $0.60 level above our primary target at $0.56 before entering a short-term correction. Traders should still play the developing uptrend, while investors should hold on to their positions here. Support levels are found between $0.45 and $0.48, while further targets are ahead at $0.64 and $0.75.

How to Use These Charts?

As we stressed in our article on Bitcoin: “…not all strategies are binary (either holding an asset or not).There are many long- and short-term investment and trading strategies that can be successful in a roaring bull market like the one that the crypto-coin segment is experiencing, but mixing the time-frames and mixing trading and investing (see our article on the topic) could lead to troubles.”

Here is a reminder of some of the possible strategies once again:

  • Buy and hold, without caring about day-to-day (or even month-month) fluctuations
  • Buy and hold a core position and add on the major dips; a very powerful strategy
  • Buy a certain amount every week or month, and even-out your entry price, without the hassle of timing the market
  • Try to catch major turning points to reduce and “re-boost” your position
  • Trade short-term movements with stop-losses, targets, and strict risk management (this is trading not investing)”

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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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