Don’t Mention the B Words – Cryptomarket Turmoil Grabs the Headlines

Bitcoin Crash

As the cryptomarket progressed through much of this year, a jump in volatility and a wave of bearish sentiment, following December’s broad-based cryptomarket rally, led to plenty of debate on whether Bitcoin and the broader market gains to record highs back in December was just a bubble ready burst.

Certainly, when comparing to the dot.com era and bubbles of old, more than 1,000 gains in a matter of weeks suggested that the gains were unsustainable and, while the Bitcoin bulls talked up the prospects of Bitcoin hitting the dizzying heights of $100,000 and more before the end of this year, the reality has certainly taken a bite.

Of particular interest is why few if any have mentioned the words bubble and burst, as for Bitcoin alone, a 75% slide from December’s all-time high would have shaken any of the major equity markets into submission.

To put it into perspective, the NASDAQ tumbled by 71% from its peak to trough in the dot.com meltdown and, while few will say that blockchain technology is worth less than the paper it’s written on, the reality is that many of the crypto coins traded across the crypto exchanges today are traded based on a white paper and concept, with few actually successfully transitioning from idea to tangible product. Perhaps that alone should be an alarm bell, particularly for market historians.

Even Bitcoin’s fight to become a viable alternative to fiat money seems flawed, with its lengthy transaction times and higher fees relative to some of the other cryptocurrencies looking for a slice of the real money pie.

So, while we can expect Bitcoin and the broader market to continue to find near-term support at such low price levels, investors continuing to believe that the next crypto rally is just around the corner, one does need to question whether the current market dynamics are sustainable.

Ripple’s XRP has shown greater resilience in the lead into and after the Bitcoin Cash hard fork and much of this has to be attributed to the team’s success in delivering an array of real-life blockchain products that have been adopted by institutions as a means to remit monies cross-border.

The team’s success is certainly far greater than any of its peers and to be fair, one does question why Ripple’s XRP has not replaced Bitcoin at the top of the crypto list by market cap, though it may just be a matter of time now and, if the general trend continues, the Ripple effect may evolve into a wave of support that could accelerate XRP’s ascendancy to the top.

We can expect investors to be licking their wounds following last week’s losses and Monday’s sell-off, which may well provide some early gains for the broader market this morning, but the reality is that investors may begin to wonder whether the latest sell-off and the effects of last week’s Bitcoin Cash hard fork on the broader market is reason enough to hold back on the Bitcoin ETF approvals.

Some institutional investors will be lining up for a piece of Bitcoin at sub-$5,000, but the smarter money may hold back for just that little bit longer, with even the more bullish of the Bitcoin bulls likely to be calling an end to the broad-based market sell-off in hope rather than certainty.

For those that are interested in the numbers, the cryptomarket cap has tumbled from last December’s $828.54bn all-time high to $159.72bn and, while this is obviously not an all-time low, it’s 2018 low and, when considering the continued rise in the number of cryptocurrencies, this market has been going in reverse through the year and it may take more than the SEC to stop the rot.

Ethereum Daily Analysis– 20/11/2018

Ethereum

Key Highlights

  • Ethereum slid by 17.45% on Monday, following on from last week’s 16.14% fall, to end the day at $145.21
  • A start of a day intraday high $175.92 fell short of the first major resistance level at $180.
  • A slide to a late in the day intraday low and new swing low $142 saw Ethereum fall through the major support levels before steadying.
  • The new swing lo $142 reaffirmed the extended bearish trend formed at early May’s swing hi $828.97.

Ethereum Price Support

Ethereum tumbled by 17.45% on Monday, following last week’s 16.14% slide, to end the day at $145.21.

Bearish through the day, Ethereum fell from a start of a day intraday high $175.92 to a late in the day intraday low and new swing lo $142, the reversal seeing Ethereum slide through the day’s major support levels by mid-morning, with a lack of support leading to further declines through the 2nd half of the day.

$200 had been the line in the sand for Ethereum as had $6,000 for Bitcoin, with the floodgates opening once the key support levels had been breached, Ethereum having fallen through to sub-$200 levels in late last week’s Bitcoin Cash hard fork induced sell-off.

There were no positives for the crypto bulls to take away from Monday’s sell-off, with the new swing lo $142 reaffirming the extended bearish trend formed at early May’s swing hi $828.97, Ethereum now some way off the 23.6% FIB Retracement Level of $304 and, of greater significance, the 38.2% FIB Retracement Level of $404 that needs to be hit to begin the formation of a bearish trend reversal.

Having already given up its coveted number 2 ranking to Ripple’s XRP, a more resilient Ripple XRP on Monday saw Ethereum fall further behind, with the market cap gap widening to just shy of $4bn, the only good news is that Bitcoin Cash is some way off at number 4, with a $9.5bn gap in market cap.

At the time of writing, Ethereum was down 10.51% to $129.95, with a bullish start to the day hitting reverse, Ethereum falling from an early morning high $149.5 to a late morning low $121.5, the reversal seeing Ethereum slide through the day’s first major support level at $132.83 to come within range of the second major support level at $120.46 before finding support.

For the day ahead, a move back through the first major support level at $132.83 would bring $140 levels into play before any pullback, though we can expect Ethereum to face plenty of resistance on the way through the day’s first major support level to pin Ethereum back from a break out to $140 levels barring a material shift in sentiment across the broader market.

Failure to move back through the day’s first major support level at $132.83 will likely pin Ethereum back to $120 levels through the day, with the day’s second major support level at $120.46 in play should sentiment fail to improve through the second half of the day.

It’s particularly bearish, the negative bias bringing sub-$120 levels into play mid-week.

Ethereum Daily Chart
Ethereum Daily Chart

Looking at the Technical Indicators

  • Major Support Level: $132.83
  • Major Resistance Level: $166.75
  • Fib 23.6% Retracement Level: $304
  • Fib 38% Retracement Level: $404
  • Fib 62% Retracement Level: $567

IOTA Daily Analysis– 15/11/18

iota

Key Highlights

  • IOTA slid by 11.97% on Wednesday, following a 0.16% rise on Tuesday, to end the day at $0.4404.
  • A mid-morning intraday high $0.5095 saw IOTA break through the first major resistance level at $0.5089 before hitting reverse.
  • A broad-based cryptomarket sell-off saw IOTA fall through the day’s major support levels to an intraday low and new swing lo $0.3501 before finding support.
  • The day’s sell-off reaffirmed the extended bearish trend formed at early May’s swing hi $2.6977.

IOTA Price Support

IOTA slumped by 11.97% on Wednesday, following a 0.16% gain on Tuesday, to end the day at $0.4404.

A mixed start to the day saw IOTA move to a mid-morning intraday high $0.5095, breaking through the day’s first major resistance level at $0.5089 before succumbing to cryptomarket forces and a broad based sell-off.

Sliding from mid-morning, IOTA tumbled through the day’s major support levels to an intraday low and new swing lo $0.3501 before finding much-needed support to break back through to $0.44 levels. In spite of the partial recovery, IOTA was unable to break back through the day’s third major support level at $0.4687, with the sell-off bringing to end weeks of debate on whether the benign trading environment was the end of an extended bearish run or the beginning of something much worse.

Wednesday’s double-digit sell-off reaffirmed the extended bearish trend formed at early May’s swing hi $2.6977, IOTA sitting some way off the 23.6% FIB Retracement Level of $0.9041 and the 38.2% FIB Retracement Level of $1.247 that needs to be broken through to signal a near-term bullish trend formation

At the time of writing, IOTA was down 5.88% to $0.4145, with a start of a day slide seeing IOTA fall from a morning high $0.446 to a morning low $0.3982 before finding support, the moves through the early part of the day leaving the day’s major support and resistance levels left untested.

For the day ahead, a move back through $0.4333 to the morning high $0.446 would support a run at $0.50 levels to bring the day’s first major resistance level at $0.5166 into play, though for IOTA to have a chance at recovering the morning’s losses, the Bitcoin Cash hard fork will need to go through smoothly and in favor of Bitcoin Cash ABC, which is leading the way on the futures market when pitted against Bitcoin Cash SV this morning.

Failure to move back through to $0.4333 by the early afternoon could see IOTA take another hit later in the day, with a pullback through the morning low $0.3982 bringing the day’s first major support level at $0.3572 into play, though the news wires will need to be quite dire for IOTA to slide through to Wednesday’s new swing lo $0.3501.

Some volatility ahead, with direction ultimately hinged on today’s hard fork that could cause some chaos should the hash power sit with Bitcoin Cash SV.

IOTA/USD Daily Chart
IOTA/USD Daily Chart

Looking at the Technical Indicators

  • Major Support Level: $0.3572
  • Major Resistance Level: $0.5166
  • Fib 23.6% Retracement Level: $0.9041
  • Fib 38% Retracement Level: $1.2470
  • Fib 62% Retracement Level: $1.809

Bitcoin Sinks as the Bears Put the V back into Volatility

bitcoin sink

Complacency may well have crept into the cryptomarket in recent weeks, some particularly tight ranges across the majors raising questions on whether the market will ever be the same again.

Wednesday’s sell-off was certainly a reminder of just how choppy the markets can get for no apparent reason, with the Bitcoin Cash hard fork and battle between the 2 camps have been headline news for a number of days and certainly not a market shock to deliver Wednesday’s blow.

Putting it into perspective, Bitcoin’s 8.31% slide may be alarming when looking at moves in recent weeks, but the reality is that even listed companies on the global equity markets have seen bigger swings in recent days and that’s not even considering the pot stocks that have demonstrated volatilities comparable to the cryptomarket of old.

Was that the bubble burst, or just another speed bump on the way to a mature market?

It’s far too early to tell and how the market responds to Wednesday’s sell-off will be key, as will the outcome of today’s Bitcoin Cash hard fork, the ultimate issue being the lack of decentralization if a 51% attack can bring down an entire blockchain, where the nodes and general network are supporting one side and the mining power supports the other.

A lack of general consensus across exchanges on how to handle the hard fork has also added to the negative sentiment felt across the market, with exchanges announcing a freeze on all BCH trading and transactions ahead of the hard fork and decisions to wind up BCH futures in fear of price manipulation amongst some of the issues the market has been facing this week.

Looking at where support sits for the rapidly approaching hard fork, Bitcoin Cash SV’s futures price stood at 0.3683 BCH at the time of writing, down 10.1% over the last hour after a relatively range-bound morning. Bitcoin Cash ABC futures stood at 0.64211 BCH at the time of writing, up 8.2% over the last hour, futures prices have provided some support to Bitcoin Cash, which has found support from the futures moves, up 0.92% to $457 at the time of writing.

Hash rates will tell a different story however and, with Bitcoin miners jumping over in search of a quick hard fork Bitcoin Cash SV, Bitcoin’s hash rate has been on the decline through November, falling from a 1st November 60.4225E to 14th November 47.3755E, the downward trend contributing to the negative bias seen in Bitcoin over the last 2-weeks.

For Bitcoin Cash, the hash rate has been steadily rising, up from a 1st November 3.5427E to a 14th November 4.9332E, though for Bitcoin Cash and the broader market, the interest will be more on the hash rates for Bitcoin Cash ABC and Bitcoin Cash SV later today…

How to Take Advantage of the New Crypto Market Volatility

Market Volatility

Volatility has fallen by such an extent that the more mature global equity markets, including the U.S equity markets, are now more volatile and therefore considered to be a riskier trade.

While the lack of direction has left the crypto majors flat by historical standards, their volatilities continue to be well above those seen across fiat currencies, though not significantly above, which does provide an opportunity to incorporate more tried and tested trading strategies and a safer environment to trade.

Advantages of a Lower Volatility Trading Environment

While the heightened volatility across the broader market through late last year and much of this year drew the attention of more seasoned day traders, leading to an increase in daily volumes, the lack of cryptomarket maturity left traders and investors exposed to a number of trading pitfalls. The current environment has alleviated a number of these, though risks do remain and could impact the market at any given time, with governments and regulators not being required to provide forward guidance.

One can only imagine how the world of FX would be if central banks simply moved rates without a schedule and any forward guidance that has essentially become a hand holding exercise. No such luck in the crypto world, where governments and regulators have little-vested interest in abiding by deadlines, as has been the case through the 2nd half of this year, where both the G20 and the SEC have pushed back on key decisions that have ultimately resulted in the tight ranges across the crypto majors.

For those looking for 2,000% returns in a matter of weeks, there aren’t going to be too many advantages to the current trading environment, but for those that are looking to trade intraday on fundamentals, now may just be the time.

Trading on Fibonacci’s, the day’s major support and resistance levels and moving averages, amongst others, coupled with the use of leverage and stop loss options certainly makes trading a far less stressful environment, with the chances of one of the crypto majors sliding by more than 20% in a given minute significantly reduced. This also means that there is greater control on buy and sell orders than before, with the amount of slippage significantly reduced, allowing traders to place market rather than limit orders.

The bad news is that the slide in volumes also means that, for some of the major cryptocurrencies at least, liquidity has also fallen off the cliff, leading to a lengthening in execution times.

Trading with Cryptocurrency CFDs provides investors and day traders with access to the cryptomarket, but with margin trading and the option to go both long and short and with the technical analysis and appropriate trading strategies, the lack of wild swings provides a somewhat different, but not unfamiliar way of generating spreads.

There are still pockets of news that drive the broader market and individual cryptocurrencies, including news of upcoming hard forks and even planned inclusion or removal of cryptocurrencies from the more recognized exchanges, both of which can lead to material price action.

Moving away from the technical, one final and significant advantage is a greater emphasis on the individual product offerings and successes of a particularly blockchain. While we are yet to be in a world akin to the global equity markets that consider macro and impact on corporate earnings, there have been some recent moves suggesting a greater awareness of product offering and adoption.

A low cryptomarket volatility environment supports a greater emphasis on individuality, with price action determined by crypto specific events that may not impact the market as a whole and less by regulatory chatter, though until the regulatory landscape has been rolled out, the chatter will continue to be a major factor.

Final Thoughts

When considering the fact that one of the biggest pitfalls in cryptocurrency trading is the significant volatility, which has limited the effectiveness of developing trading strategies, the time is certainly ripe to begin incorporating the very strategies that may have had limited success just a matter of weeks ago.

Added to that is a likely cryptocurrency price convergence for the more frequently traded cryptocurrencies across the more liquid exchanges that account for the lion’s share of daily trading volumes.

While the positives are evident from a trading environment perspective, pitfalls do remain, however, with price manipulation, ICO pump and dumps and cyber theft all capable of impacting a particular cryptocurrency and, more often than not, the broader market, making it all the more important to protect the downside, irrespective of the trading environment.

NEM’s XEM Daily Analysis – 14/11/18

NEMXEM

Key Highlights

  • NEM’s XEM fell by 2.52% on Tuesday, partially reversing Monday’s 20.41% rally, to end the day at $0.10948.
  • A start of a day intraday low $0.10743 saw NEM’s XEM hold above the day’s first major support level at $0.0974.
  • NEM’s XEM rallied to a mid-morning intraday high $0.12579, breaking through the first major resistance level at $0.1220 before hitting reverse.
  • The extended bearish trend formed at late April’s swing hi $0.46546 remained intact, with NEM’s XEM continuing to fall well short of the 23.6% FIB Retracement Level of $0.1695.

NEM’s XEM Price Support

NEM’s XEM fell by 2.52% on Tuesday, partially reversing Monday’s 20.41% Coincheck driven rally, to end the day at $0.10948.

A bullish start to the day saw NEM’s XEM continue on with Monday’s rally, with NEM’s XEM moving through to a mid-morning intraday high $0.12579, NEM’s XEM breaking through the first major resistance level at $0.1220, while falling short of $0.13 levels and the second major resistance level at $0.1316.

Resistance on the way through to $0.13 levels ultimately did the damage, as investors looked to take some froth off the top, leading to a late morning reversal that continued through to the day’s end.

NEM’s XEM fell back to the 2nd half of a day low $0.1085 before steadying, the reversal seeing NEM’s XEM hold above a start of a day intraday low $0.10743 that left the day’s first major support level untested.

In spite of Monday’s rally, the extended bearish trend remained firmly intact, with NEM’s XEM continuing to fall well short of the 23.6% FIB Retracement Level of $0.1695 and reaffirmed by Tuesday’s reversal.

At the time of writing, NEM’s XEM was down 0.68% to $0.10873, with a relatively choppy start to the day seeing NEM’s XEM fall to a morning low $0.10484 before moving through to a morning high $0.11348, the moves through the early part of the day leaving the day’s major support and resistance levels untested.

For the day ahead, a move back through $0.1142 would another run at $0.12 levels to bring the day’s first major resistance level at $0.1210 into play, with a shift in sentiment across the broader market through the mid-morning supporting an afternoon recovery, though NEM’s XEM will need to hold onto $0.11 levels to avoid another sell-off.

Failure to move back through $0.11 levels by the early afternoon could see NEM’s XEM pullback through the morning low $0.10484 to test the day’s first major support level at $0.1027, with sub-$0.10 support levels unlikely to be tested on the day, barring a material shift in support for Bitcoin SV ahead of tomorrow’s hard fork.

Investors will be mindful of disruption across the broader market should tomorrow’s hard fork go against the grain.

XEM/USD Daily Chart
XEM/USD Daily Chart

Looking at the Technical Indicators

  • Major Support Level: $0.1027
  • Major Resistance Level: $0.1210
  • Fib 23.6% Retracement Level: $0.1695
  • Fib 38% Retracement Level: $0.226
  • Fib 62% Retracement Level: $0.3174

Bitcoin Cash – Market Jitters Ease Ahead of the Hard Fork

bitcoin cash

Market sentiment towards Thursday’s hard fork has shifted in favor of Bitcoin ABC and the early morning gains in Bitcoin Cash certainly reflect a sense of calm, though it’s too early to be counting one’s chickens just yet.

Looking across at the respective futures prices for Bitcoin ABC and Bitcoin SV, we’ve seen a pullback in Bitcoin SV, which has been in reverse through the early hours of this morning, falling from an all-time high $209.19 to $175.50 at the time of writing, an 18.3% fall this morning, which is quite a significant statement.

For Bitcoin ABC, it’s a somewhat different story, but nonetheless continuing to reflect a shift in favor of the Bitcoin ABC team ahead of the fork, with the futures price standing at 0.6767694 BCH at the time of writing, an upward trend having kicked in through the early hours of this morning, with Bitcoin ABC rising from 0.59206 BCH to a morning high 0.68889 BCH before easing back.

If it was down to the futures price alone, the forward guidance would be a Bitcoin ABC victory, but it’s the hash rate and not the futures price that wins the war.

On the hash rate side of the equation, the war has been heating up. While CoinGeek is reported to have 36.8% of the Bitcoin Cash network’s hashrate, Bitmain, which backs the Bitcoin ABC camp, is one of the largest holders of Bitcoin Cash. Calling on the Chinese mining farm community, Bitmain has asked for the deployment of almost 100,000 Antminer S9 miners ahead of the hard fork. A deployment of this magnitude would certainly shift the balance, though it remains to be seen whether the Bitmain team was able to muster up enough support to take it on the day.

BTC/USD Daily Price Forecast – Bitcoin Surprisingly Stable; Range Trading Strategies Developing

Against the U.S. dollar, valuations in Bitcoin (BTC/USD) are developing in ways which suggest a positive potential for range trading strategies.  Somewhat counterintuitively, Bitcoin has actually been one of the market’s most stable assets over the last several weeks. Stock markets have been met with major selling pressure and emerging market assets have experienced turmoil during this period.  But price behavior in BTC has managed to hold up in an incredibly resilient fashion, and this brightens the outlook for those bullish on the space as we head into the final weeks of this year.

  • Critical Resistance:   6,615.00
  • Critical Support:   6,252.10
  • Trading Bias:  Bullish
  • Bitcoin Crypto Strategy:  Buy at 6,359.60

This creates an outlook in which bullish trades have the potential to generate gains.  That said, it is important that crypto traders remember to maintain a stop loss when trading in these instruments.  From the longer-term perspective, BTC/USD is trading just above critical support levels.  These levels are significant enough that, if tripped, they could force a mass exodus and send price levels much lower in a short period of time.

Bitcoin 1H Chart
Bitcoin 1H Chart

At this stage, there is little reason for concern as range trading conditions have clearly developed for these instruments.  Under these conditions, the conventional wisdom tells us that we buy as prices approach the bottom-end of a trading range.  In Bitcoin, this implies a buy zone which falls near the 6,359.60 level.  Stop losses can be placed under the prior lows from October 31st at 6,252.10.  Crypto traders should consider taking partial profits on an approach toward the 6,615.00 resistance level from November 7th.  Once this occurs, traders can move to stop losses to the breakeven point for the remainder of the position.

XRP Daily Price Forecast – Ripple Forming A Higher Range

Against the U.S. dollar, valuations in the Ripple cryptocurrency (XRP/USD) look to be in the process of forming a higher range on the 4-hour charts. Thus far, November has been a very good month for those with long positions in Ripple.  After a period of slight correction (retracement), XRP/USD has found near-term support which may work as a platform in sending the crypto pair higher.  With the moving average cluster moving up to provide extra support under current levels, crypto traders can use these levels to initiate new buy positions near 0.49510.

  • Critical Resistance:   0.57000
  • Critical Support:   0.49510
  • Trading Bias:  Bullish
  • Bitcoin Crypto Strategy:  Buy at 0.51650 / 0.49510

Indicator readings in the CCI are actually showing a bullish divergence with the short-term thrust higher near 0.53000.  This is another positive factor which strengthens the case for a retest of the November 6th high at 0.57000.  This area is likely to encounter some profit-taking from those with long positions in XRP/USD.  But if we do manage to break above these levels, traders are likely to begin focusing on the previous double-top resistance (which has formed at 0.62250).

XRP/USD Chart
XRP/USD Chart

On the downside, a break of support at 0.49510 will target a larger move into the lows which were posted at the end of October (near 0.48800).  These lows mark a double-bottom formation which should provide some additional support if tested.  At this stage, the focus remains on the topside, and this will continue to be the case as long as support levels at 0.49510 remain intact.  Longer-term trends on the daily charts look to be based near current levels, and this strengthens the argument that markets are ready to make a push higher in the XRP/USD crypto pair.

BCH/USD Daily Price Forecast – Bitcoin Cash Bouncing From Fibonacci Support

Bitcoin Cash

Price behavior in Bitcoin Cash is showing a reversal from the prior trends posted during the early parts of November.  Against the U.S. dollar Bitcoin Cash has rallied sharply since the beginning of the month, and BCH/USD is currently posting a corrective move as a means to work off its overbought price conditions. All of this activity has increased volatility in the instrument but we are currently coming into some important technical levels which can be used for new positioning stances in the sessions ahead.

  • Critical Resistance:   646.80
  • Critical Support:   410.10
  • Trading Bias:  Moderately Bullish
  • USD/CNY Forex Strategy:  Buy at 503.10  

These latest impulse moves in BCH/USD have sent the pair back into Fibonacci support on the 2-hour charts.  If we measure from the lows from late October to the highs from November 8th (at 646.80), we can see the 61.8% Fibonacci retracement comes in close proximity to historical support levels (at 503.10).  The confluence of historical support and Fibonacci retracement readings strengthens the level of importance for the 503.10 price zone.  This suggests that we can use this level as tradable support in the establishment of new positioning stances.

Bitcoin Cash Chart
Bitcoin Cash Chart

Given the extent of the market’s recent price moves, short-term swing traders may elect to stop out the position if these Fibonacci support levels are broken.  A downside violation of 503.10 suggests a full retracement of the prior bull wave and targets a move back into support at 410.10.  With the two-way activity which has defined sentiment for this month, it makes sense to be aggressive with stop losses and take profit levels over the next few sessions.  Prices are currently caught within the moving average cluster, and indicator readings are almost exactly at mid-range (which softens the bullish bias).