Market Commentary

Bitcoin Correction • South Korea Regulations • Venezuelan “Petro” • JP Morgan • Ripple

Use the PROMO CODE A060NREP to get a FREE SUBSCRIPTION to any plan for two months. You need to be registered to have access to some sections of this report.

Bitcoin Correction

It’s been a dismal year so far for the cryptocurrency markets, and — as evidenced by the Bitcoin price’s more than 50 percent retrace from its all-time high — the volatility has begun to shake out investors with weak hands. Tom Lee, a former JPMorgan equity strategist who now runs market research firm Fundstrat Global Advisors, told clients that now is an excellent opportunity to consider adding to their cryptoasset stakes, saying that “It has been a terrible few weeks but the fundamental positive story for crypto remains intact”. He told clients not to panic, reminding them that throughout Bitcoin’s history, sell-offs have been generally been followed by significant rallies within a relatively short period of time. Based on this data, he said that it is worth the risk for investors to add to their positions, even if the market continues to decline.
“Past sell-offs were followed by rallies of ~150% within 84 days,” Lee said. “In other words, we think the risk/reward at these levels warrants adding here, even if there is additional downside.”
Several analysts including BKCM’s Brian Kelly and renowned trader Peter Brandt stated that the price of bitcoin could dip again before the market shows signs of short-term recovery. Kelly said that the price of bitcoin could decline by 15 percent and the cryptocurrency would still be overvalued. Brandt explained that based on the current trend, the price of bitcoin could drop to $7,700 before rebounding. Brandt added that during a phase like this, it is important for traders and investors to remain patient with their investments. The market is extremely volatile and it could move upwards or downwards by more than 30 percent overnight. “Patience and discipline to trade well defined geometric price patterns with predetermined risk/trade mgmt provides me with my trading edge,” added Brandt.

 

South Korea Regulations

South Korea recently adopted new cryptocurrency trading regulations designed to curb the country’s heated markets. Beginning today, investors can no longer trade anonymously, so they must link their accounts with real-name bank accounts. Foreign traders are also prohibited from accessing the markets. The new rules have correlated with a general decline in cryptocurrency prices, but local exchanges and many analysts believe they will strengthen the ecosystem over the long-term.

 

Venezuelan “Petro”

On December 3, 2017, Venezuelan president Nicolas Maduro announced plans to create a national cryptocurrency called the ‘Petro’ that will be backed by the country’s natural resources, most notably its substantial oil reserves. The first offering of the digital currency was only days away, he said: “Camp one of the Ayacucho block will form the initial backing of this cryptocurrency. It contains 5.342 billion certified barrels of oil. We’re talking about backing of $267 billion.” The Ayacucho block is part of Venezuela’s southern Orinoco Belt of oil reserves. Venezuela is the country with the world’s largest oil reserves, according to OPEC, with a reserves of 302 billion barrels of crude oil. Further explaining the hopes that the creation of the digital currency would be instrumental in circumnavigating the US-led sanctions, Rodriguez added: “It will be materially impossible for the dictatorial financial centers of the world to intervene against this initiative. It will allow us to overcome any financial blockade.”

In order to mine it, people will have to be registered with Venezuela’s Registry of Cryptocurrency Miners. This agency was created in order to track people mining bitcoin as Venezuelans started to use the digital currency in an effort to hedge themselves against inflationas well as to purchase food and other items online. All operations related to Petro will be under the jurisdiction of the country’s Superintendency of Cryptocurrencies and Related Assets.

Currently, there are over 860,811 people already registered with the mining bodyseeking to mine Petro. Maduro revealed that some of the people registered would be employed by the government to set up mining sites across the country. He said, “We are going to call them, a special cryptocurrency team, to set up mining criptomenoda farms in all the states and municipalities of the country.”

 

JP Morgan

J.P. Morgan CEO Jamie Dimon, who had previously called Bitcoin a “fraud” and threatened to fire any employee that invested in the cryptocurrency, told a Cointelegraph reporter at the World Economic Forum(WEF) on Jan. 24 that he’s “not a skeptic” in regards to his previous crypto criticism.

 

Ripple

A key product for one of the most well-known industry startups, the digital asset won no shortage of favor from investors enamored by its goal of disrupting an oligopolistic global payments industry. And the company provided fresh reasons for the interest. By the time XRP had become the world’s second-largest cryptocurrency, three of the top five money transfer companies worldwide were said to be in the process of implementing XRP in their payment flow systems. However, as the month progressed, the optimism failed to keep XRP bid. A rumored listing on Coinbase never happened, and this, coupled with a broader market weakness weighed heavily over XRP. As of now, XRP is changing hands below $1 – a figure that’s down almost 80 percent from its record high.

 

Top-20 Cryptocurrencies

 

Week Highlights


Bitcoin Market Overview & Forecast


Bitcoin is slightly recovering after another great fall during mid-week, but latest action indicates that it is struggling and it may drop once again, henceforth establishing that we are in a firm bear grip. With all the recent news and panic buttons being triggered, future remains uncertain, but we are still hopeful of a long-term bullish trend resume, once this battle is finished.

Market Overview

This past week, bitcoin price fell from $11,800 and reached the $8,000 threshold, having actually been traded below that level. It was one of the scenarios that we anticipated in the previous edition of this weekly report: if the psychological barrier at $10,000 was broken by the bears, then we expected to see some intensified selling, which could bring the price, in a worst-case scenario, to the $8,000 level. One week has passed, and that scenario prevailed.

As we write this report, bitcoin is, in its US Dollar pairing, trading near the $8,500 mark in a localized downward trend that has been established since the slight recovery from this year-bottom, up to almost $9,500. In a four-hour time frame, a resistance line at the $9,400 mark has already been settled; it looks to be the first goal to reach if we intend to see a reversal in trend from later days behavior. And on a daily time frame, the first rally point at $10,400, already seems far distant and not so quickly achievable.

However, the very-short-term panorama points for another test at the $8,000 support line, which is currently being reinforced by a 200-SMA, in a daily time frame. Last Thursday, we watched an impressive response to the first test on that level, with an abnormal volume been pulled by bulls in response to the apparent sold-out. In the eventuality that bulls win this struggle happening slightly above the $8,000 support, rallies are expected to be short-lived events, rather than sustaining moves higher.

Forecast

Bitcoin market is incredibly volatile and short-term scenario is currently pretty hard to forecast. As a curiosity, the following figure depicts its trading volatility in a daily comparison with gold or S&P 500 index:

We remain bullish on the long-term setup but the news of increased regulations, hacking, crackdown by various governments, bubbles bursting or orchestrated dumps – which are frequently highlighted in mainstream media – constrains us from doing more plausible trading scenarios in short-term frames. Psychology is a decisive factor while forecasting, and, in an almost settled panic environment, we prudently advise extreme caution while waiting for long-term buying opportunities.

Prices are likely to continue under pressure, and if this leg we’re currently watching confirm a bottom in the bitcoin price, and if it breaks the recent lows below $8,000, it’s plausible that the fall could extend to $6,000 or $5,000 levels. Our final strong support level now sits around the $4,000. Long-term traders should wait a couple of days before entering the market, hopefully with RSI in oversold levels and with a more positive attitude from traders and investors towards the bitcoin ecosphere.

Bitcoin Technical Analysis & Trade Ideas


Technical analysis

This week, we remain on the daily chart for the BTC/USD pair prices, for a more proper view on determining the general market direction. Short-term indicators are essentially bearish, so we stay in this time frame to plan ahead our entry zones.

During almost all week, we’ve been watching a succession of red candles being formed day after day. Because of that, the triangle pattern has been broken to the downside. A dynamic price resistance has, in the meanwhile, establishing itself in $10,310 mark, and the price is closing in, from above, into the 200-SMA which still remains bullish and will act as support in upcoming days – along with the 0.618 retracement from ATH to September low. Ichimoku cloud remains bullish above and ahead of the market but is quickly narrowing and in the imminence of turning bearish if price action continues the downward trend. With all the averages stacking above to the downside and accelerating on a daily basis, we don’t prospect a quick reversal and a steady rally reversing the trend, unless the bulls start to struggle more vehemently in this support region.

Switching to momentum and volume, we see RSI almost entering oversold territory, after a small spike in response to the first test at the $8,000 level. Willy and Stochastic also wiggle a bit slightly above our threshold for oversold levels, while MACD is still below its zero-line. Our Laguerre indicator continues to flash green signals and volume had a huge spike, setting up current year’s maximum. Having said the all picture in words, our opinion points to some instability and uncertainty in upcoming days, but we keep bullish in the long term and still looking for some more obvious entry points.

Trade ideas – Market entry/exit values.

  • Bitcoin Very Short Term (hours-days
    • No recommendations until further notice.
  • Bitcoin Short Term (days-weeks)
    • [EXITEDWe entered this trade on 8,000 $ with a stop on the 7,500$ and a target of 9,500$. We were stopped out of the LONG position off of the 7950$ level at 7525$ for -4.09%.
    • We will consider a SHORT position on a retracement back up to the 9500 $ – 10,500 $ area with a stop around 10,500 $ and a target of 8,500 $.
  • Bitcoin Medium Term (weeks-months)
    • We will consider a LONG position on a selloff down to the 6000 – 6500 $ area with a stop around 5846 $ and a target of 10,500 $. r/r 19:1
  • Bitcoin Long Term (years) 
    • We will consider a LONG position on a correction down to the 3000 – 4000 $ area with a stop around 2975 $ and a target of 22,600 $. r/r 18:1

Altcoin of the Week


We continue our tour around some major altcoins and this week we have picked up Litecoin (LTC) to make its debut on this technical section. Litecoin is a peer-to-peer cryptocurrency inspired by – and in some technical details is almost identical to – bitcoin.

LTC doesn’t escape the major trend of its main currency but what flashed our attention was the impressive rally it made since Friday, from the bottom wick almost touching the $100.00 barrier to a Saturday close near the $160.00 level. At the moment of this writing, LTC is being traded slightly above the $140.00 mark, correcting low as all other major cryptocurrencies.

As with bitcoin, we’re slightly bullish in the long-term for this asset, not only because of the upward 200-SMA providing support for the current price action, but also for the $100.00 mark which sets up a psychological pivot level. Our main support and long-entry zone lie around the $85.00 price level if bears try to test that former barrier.

Looking up at the daily timeframe for the Litecoin-USD prices, we see a dynamic resistance being built around the $175.00 mark, with prices decelatering their downward trend, and approaching the bearish trend line. Having crossed the 100-SMA to the downside earlier this week, and testing the 200-SMA on Friday, prices are now slightly recovering with an huge volatility between those averages. Ichimoku cloud remains bearish above and ahead of the market, and main oscillators are still above oversold territory, perhaps waiting for some consolidation from the main market. A fall in prices and another test on the $100.00 mark will potentially place them in oversold territory, reinforcing the flashing signals being flagged from daily Laguerre-PPO for quite some time now. And volume profile looks pretty healthy this weekend which shows that their rally performance hasn’t escaped the eyes of main investors.

Overall, while we’ll look for some consolidation, and wait a bit to see what happens to bitcoin, we will keep Litecoin performance under scrutiny, with a potentially entry in a long-term setup if prices fall below the hundred dollar mark.

Altcoins Forecast & Trade Ideas


Go long on blue/green zones (buy) / Go short on red/orange/yellow zones (sell). Blue dots are dynamic support zones, with high probably of an bear inversion. Red and purple dots are dynamic resistance zones, with a high probability of a bull inversion or pullback. The technical indicators section is based on the 1W (one week) timeframe, plotted with Tradingview data. Most of the technical indicators reflect a momentum representation and not a broader contextual overview of the market.

Monero / Ethereum

XMR/BTC – MONERO

Weekly Timeframe

ETH/BTC – ETHEREUM

Weekly Timeframe

[/mepr-active]

Litecoin / Dash

To continue reding this section you must have the “Investor or Pro” plan.

Click to subscribe PRO PLAN Already member? click to upgrade LOGIN IN YOUR ACCOUNT

LTC/BTC – LITECOIN

Weekly Timeframe

DSH/BTC – DASH

Weekly Timeframe

Technical Analysis Explained – Ichimoku Cloud Indicator


Every week, our top analyst explains what to expect of some key market indicators. This will help you to better follow some of our recommendations.

Click here to learn more

Ichimoku Kinko Hyo, also known as the Ichimoku Cloud or simply as Cloud, is a ‘complete’ indicator which uses moving average data to show the trend of an instrument, the strength of that trend, dynamic areas of present and future support and resistance, and more.

Why we like it

We see the Ichimoku Cloud as a more powerful and complete version of MAs (Moving Averages) or EMAs (Exponential Moving Averages). While (E)MAs also show MA crosses and indicate possible areas of support and resistance, Cloud does a lot more. It shows more areas of support and resistance (Senkou Span A & and Senkou Span B), it can show targets for long/short positions in the case of an edge-to-edge trade (flat Kumo or just opposite edge of the Kumo Cloud), it gives breakout areas (Kumo breakout points), it can help you determine how much conviction to have in a position (TK cross relative to Cloud), and more. In short, it is like using (E)MAs on steroids.

How we use it

The first thing I do is adjust the inputs on the Ichimoku Cloud to 20/60/120/30 to better reflect the fact that cryptocurrency markets operate 24/7 (see below). If we’re looking at an altcoin which doesn’t have enough price history for the Ichimoku Cloud to work properly, I will reduce the settings to 10/30/60/30.

Adjusted settings for using the Ichimoku Cloud

We use the Ichimoku Cloud in two main ways.

  1. To see the direction of the macro trend. This is done by looking at price in relation to the Kumo Cloud on a high time frame like the 1D. At a glance, I can tell where the current trend is, how strong it is, and when it started/the last one reversed.
  2. To find confluence with areas of support and resistance that I already have on my chart. This is the most common way in which I use the Ichimoku Cloud. Namely, I will draw my lines/levels of support and resistance first, and then overlay the Ichimoku Cloud to see if any of my lines have confluence with the indicator e.g. a support line which lines up with the Kijun line will make me more confident about that support level holding, and the same applies if I were to have a resistance line which lines up with the top boundary of the Kumo Cloud i.e. the bullish Kumo breakout point.

Around the Web


sold all my btc at 750 in nov 2016, then bought back in december 2017 at 18.5k from Bitcoin


 

RESEARCH REPORTS & NEWSLETTER

 

Join our mailing list to receive the most insightful market commentary and information compilation of the top crypto-assets available

You have Successfully Subscribed!