Weekly Forecast: Cryptocurrency Prices Search for Reprieve Following $100 Billion Correction
Cryptocurrency prices have shed nearly $100 billion in market capitalization over the past two weeks. In the process, bitcoin touched its lowest levels of 2018 and EOS gave back almost two-thirds of its April peak.
Market participants have been struggling to explain the multi-week selloff, which has defied rationality amid a flurry of positive developments hitting the airwaves. The search for an elusive bottom will continue in the final week of June as investors await new breakthroughs in institutional adoption and custodial services.
Battered Market Searches for Direction
From $344 billion to $241 billion, cryptocurrencies have experienced an epic meltdown over the last 14 days. Analysts have posited several theories for the correction, from market manipulation to the gradual unwinding of large positions held by the so-called bitcoin whales.
In recent days, the selloff appears to be driven by technical re-positioning after bitcoin failed to break above key resistance hurdles. The subsequent declines has exposed new support levels for the digital currency, with technical strategists now eyeing $5,850 as the next major bottom.
On June 12, cryptocurrency analyst and bitcoin bull Ran Neu-Ner correctly predicted that BTC/USD values would fall below $6,250. His forecast indicated that a deeper correction below $5,000 is possible in the short-term. Tony Vays, host of the Crypto Scam podcast, has also predicted a breakdown below $5,000.
An analysis of bitcoin’s technical indicators – namely, the RSI, MACD and Stochastics – reveals that the digital currency is trending closely with its 2014 bear market. With the bears reasserting control of the market, investors can expect continued volatility over the next seven days. (Ironically, the latest bout of turbulence began shortly after Hacked reported that bitcoin volatility had declined to its lowest level in over a year.)
EOS: PR Nightmare Continues
While no major cryptocurrency has been spared from the recent carnage, EOS continues to lead the declines following a botched mainnet launch earlier this month. For example, EOS was down by as much as 13% Sunday compared with single-digit losses for bitcoin, Ethereum and Ripple XRP.
EOS’ developers have been criticized by Cornell professor Emin Gun Sirer and smart contracts pioneer Nick Szabo for not seeking assistance from blockchain experts prior to the mainnet launch. Sirer and Szabo, among others, have also criticized the network for centralization issues.
EOS is severely oversold from a price perspective, but that may not be enough to reverse its bad fortunes. The PR nightmare continued last week after the EOS Core Arbitration Forum (ECAF) directed block producers to avoid processing transactions from 27 wallet addresses.
Sam Sapoznick, the ECAF Interim Emergency Arbitrator, issued the following statement:
“It is hereby ordered that the EOS Block Producers refuse to process transactions for the following accounts and keys indefinitely. (Until further official notice and instruction from the ECAF.)”
In conventional markets, investors can expect a steady stream of economic data over the next five days. The following releases are most pressing for traders of stocks, currencies and commodities.
ICO’s monthly report on German business confidence will be in the headlines at the beginning of the week. In North America, the U.S. Commerce Department will report on new home sales for the month of May.
U.S. home-price data courtesy of S&/Case-Shiller will be released on Tuesday. The Richmond Federal Reserve will also report on regional manufacturing activity.
On the monetary policy front, speeches from FOMC members Raphael Bostic and Robert Kaplan are scheduled for Tuesday.
Keeping with economic data, Bank of England (BOE) Governor Mark Carney is scheduled to deliver a speech mid-week. BOE officials last week sent a strong signal that interest rates could be on the move this summer.
In terms of economic data, the U.S. Commerce Department will report on trade and durable goods orders. The U.S. Energy Information Administration (EIA) will release weekly crude inventory data, which will be closely watched by commodity traders following OPEC’s decision to raise production levels on Friday.
The Reserve Bank of New Zealand (RBNZ) will deliver an interest-rate verdict on Thursday. No change in policy is expected.
On the data front, the European Commission’s statistical agency will release a bevy of sentiment indicators, including reports on consumer confidence and the business climate. Investors can also expect flash CPI data for Germany and Italy.
The U.S. government will publish its third and final estimate of Q1 GDP on Thursday.
German unemployment and retail sales figures will headline an active European session on Friday. Eurostat will also release preliminary CPI data for the month of June.
In the United States, personal incomes and outlays will be in the headlines. The monthly report will include the latest estimate of core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation.
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.
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