Market Commentary


Last week we forecasted a stabilization of the market, with the range $6,000-$6,200 acting as a solid support. Confirmed. Also, we added the impression that BTC/USD had some margin to recover, yet not its full extent – with the caveat that we would need to do it step-by-step. Also confirmed. Finally, we mentioned that the price action looked a bit fragile – not yet consolidated -, and that a bullish run would probably hit the wall again. This still needs to be confirmed, but our analyses point down to additional difficulties in the bulls’ aspirations.

Much of this week’s highlights go to the performance of Ripple (XRP). Several positive news and rumors of potential adoption from banks have ignited the speculation around it and XRP delivered an astonishing 101.81% weekly gains performance. Also, with the recovery of Bitcoin and the solidity provided by the $6,000-$6,200 range in terms of support, it was natural to see the overall market capitalization to have a weekly improvement. Comparing with the last weekend report values, at press time, we see an increase of $25 Bn in the global market capitalization, which now sits at $225.4 Bn. Bitcoin dominance dropped significantly to levels only recorded at the end of July, beginning of August: 51.3%. One week ago that value was slightly above 55.6%, which translates into over 5% of Bitcoin dominance lost to the remainder altcoins.

If we rewind back one month, the setup isn’t much different from what we are experiencing at the moment. However, back then, we had a more consolidated sideways market, and with a more pronounced low volatility. Now, the panorama is the aftermath of a turbulent period, and the market is starting to show signs of recovery after testing again the $6,000 mark, although is starting to develop the same symptomatic behavior on the volume side of the equation.

 


Latest News


 

SEC Moves to Make Decision on VanEck-SolidX Bitcoin ETF Proposal. The U.S. Securities and Exchange Commission (SEC) announced Thursday that it has begun proceedings to decide whether to approve a proposed bitcoin exchange-traded fund (ETF). The SEC published an “order instituting proceedings to determine whether to approve or disapprove a proposed rule change” filed by Cboe BZX Exchange, Inc. If approved, Cboe would have the green light to list a bitcoin ETF pitched earlier this year by money management firm VanEck and crypto startup SolidX. The SEC has already delayed making a decision on the matter once, and can potentially delay making a final decision through February under existing regulations.

Cryptocurrency Markets Continue Resurgence as Ripple Claims 68 Percent Weekly Gains. Bitcoin (BTC) has rapidly corrected its monthly losses Friday, September 21, after markets rallied to send prices above $6,700 for the first time in two weeks. Ripple (XRP) nonetheless stood out as the clear winner on Friday, continuing its surge of over 44 percent on the day to hit weekly gains of around 68 percent, currently trading around $0.46.

US Congressman to Introduce Bills Supporting Blockchain Technology, Cryptocurrencies. U.S. Rep. Tom Emmer (R-MN) is planning to introduce three bills to support blockchain technology and cryptocurrencies, according to a press release published September 21. The three upcoming bills are entitled the “Resolution Supporting Digital Currencies and Blockchain Technology,” the “Blockchain Regulatory Certainty Act,” and the “Safe Harbor for Taxpayers with Forked Assets Act.”

5 Members of Congress ‘Strongly Urge’ IRS to Update Bitcoin Tax Guidelines. In a letter dated Sept. 19 and published on the House Ways and Means Committee website, five representatives — Kevin Brady (R-TX), David Schweikert (R-AZ), Lynn Johnson (R-KS), Darin LaHood (R-IL), and Brad Wenstrup (R-OH) — “strongly urged” the IRS to issue comprehensive, updated guidance on federal tax obligations associated with disposing cryptocurrency assets, either through trading or other means. The legislators repeatedly contrasted the agency’s increasing enforcement of cryptocurrency tax evasion, which included taking trading platform Coinbase to court to obtain information on customer transactions.

Australia’s First Dollar-Backed Crypto Stablecoin to be Launched in 2019. Australia is about to get its first Aussie-backed stablecoin. This will be made possible by a partnership between Bit Trade, one of the oldest cryptocurrency exchanges in Australia, and blockchain employment platform, Emparta. The two firms will collaborate in designing and launching the stablecoin which is expected to be launched next year.

Poland’s Top Bank to Launch Blockchain Platform for Document Management Within ‘Days’. Poland’s largest bank will launch a blockchain solution for its customer documents via a partnership with UK-based Coinfirm “in the coming days,” the parties confirmed in a press release Thursday, September 20. Part of a drive to enhance security of customer data, PKO Bank Polski will use Coinfirm’s Trudatum to provide blockchain-issued paperwork to its some five million account holders.

German Finance Minister Doubts Crypto Can Currently Replace Traditional Currencies. Germany’s Finance Minister doubts that cryptocurrencies can currently replace traditional fiat currencies, Cointelegraph auf Deutsch reports today, September, 18. “I would doubt today, whether it has a perspective as a currency model, “ said Scholz at a “citizens dialogue” at the German-Dutch Army Corps in Münster. Scholz compared cryptocurrencies to the tulip fever bubble in the Netherlands in the 17th century saying, “and the danger is great that there will be such a tulip inflation.”

Ukrainian Parliament Proposes Tax Bill for Digital Currencies. The Verkhovna Rada, the parliament of Ukraine, has proposed a bill that, once passed into law, would tax operations with crypto assets, according to a draft law published September 14. The tax bill, which was initiated by 23 government officials, suggests a five percent tax on individuals and legal entities operating with virtual currency assets, such as cryptocurrencies and tokens.

Brazil’s Largest Independent Broker Is Launching a Crypto Exchange. The parent company of Brazil’s largest independent broker is setting up a cryptocurrency exchange, Bloomberg reported Thursday. Grupo XP, which owns brokerage firm XP Investimentos, plans to launch the platform in the “coming months,” the news source said, adding it will support trading in bitcoin and ethereum. However, despite the notable move, the firm seems a little reluctant to dip their toe in the crypto waters.

 


Crypto Weekly Charts


Total Market Capitalization

Top 20 by Market Cap

Bitcoin Volume / Exchange

Top 20 by Volume – 1d, 7d, 30d

Percentage of Total Market Capitalization – Dominance

 


Bitcoin Market Overview & Forecast

The positive momentum of Bitcoin and all other major altcoins finally managed to propel a pierce on the solid barrier of $6,600 and the price went up beyond it, up to the $6,800 mark – forecasted by us, a long time ago, as another pivotal point. Friday was the day with most traded volume and, as we entered the weekend, that volume is consistently dropping to lower levels, with the price trend pointing down into the corrective direction. As we write this report, BTC/USD is trading at near $6,700, in the Bitfinex exchange.

The strong correction in the 5th of September left some ugly scars in the recovery path of Bitcoin. However, some good signals have started to arise from the charts and, despite the potential scenario of an even stronger correction, we look to the future in a more optimistically way, when compared to one week ago. The first relevant insight is the prominent role that the $6,000-6,200 range has been taking in the support of the price action and the ability of the market to pierce the first line of resistance.

[switch between the Market / Forecast section below]

Market Overview

The Week in Numbers

Last weekend, Bitcoin markets experienced a relatively low liquidity period. With the $6,600 resistance level proving to be solid, a first attempt at bringing down prices on Sunday was only successful on the day after, when volume almost tripled up in size. Tuesday set the trading range in the $6,200-6,400 enclosed region with a positive evolution of prices, until Wednesday delivered us a very interesting trading day, with unpredictable action.

First, the low volume was already returning as a trademark of the period we are experiencing until a selling pressure developed and quickly brought prices down to the $6,120 mark. However, that movement was quickly countered and Bitcoin escalated the charts in no time, up to the $6,550 level. Eventually, prices corrected and the take profit period made the close price to stay below the $6,400 mark. Thursday started by trying to keep the same ascending pattern, but price failed to surpass the $6,600 resistance and closed 100 points below it.

The positive momentum of Bitcoin and all other major altcoins finally managed to propel a pierce on that solid barrier, and the price went up beyond it, up to the $6,800 mark – forecasted by us, a long time ago, as another pivotal point. Friday was the day with most traded volume and, as we entered the weekend, that volume is consistently dropping to lower levels, with the price trend pointing down into the corrective direction. As we write this report, BTC/USD is trading at near $6,700, in the Bitfinex exchange.

Market Capitalization and Dominance

Much of this week’s highlights go to the performance of Ripple (XRP). Several positive news and rumors of potential adoption from banks have ignited the speculation around it and XRP delivered an astonishing 101.81% weekly gains performance. Also, with the recovery of Bitcoin and the solidity provided by the $6,000-$6,200 range in terms of support, it was natural to see the overall market capitalization to have a weekly improvement.

Comparing with the last weekend report values, at press time, we see an increase of $25 Bn in the global market capitalization, which now sits at $225.4 Bn. Bitcoin dominance dropped significantly to levels only recorded at the end of July, beginning of August: 51.3%. One week ago that value was slightly above 55.6%, which translates into over 5% of Bitcoin dominance lost to the remainder altcoins.

Best and Worst Weekly Performers

Last weekend, our weekly chart of the top major altcoins traced out a mixed scenario of recovery, in the sense that when contrasted with the previous week chart, the panorama of a completely bearish scenario gave rise to the evidence of recovery in some altcoins. This week’s performance was way more notorious and positive, and the chart looks pretty healthy.

As mentioned before, the weekly highlight has to go to XRP with gains of 101.81% in a 7-day period. Despite the also promising performance of Stellar (XLM) and Cardano (ADA), which had gains of 34.10% and 29.61%, respectively, they have to stick with the consolation award, as Ripple performance was truly impressive. At some point during the week, it managed to claim the 2nd position in the market capitalization ranking, dethroning Ethereum (ETH) from that place.

In the bottom line of the performance spectrum, Monero (XMR) and Tezos (XTZ) with weekly gains of 3.84% and 3.66% complete the healthy picture that crypto-markets are transpiring at this stage. Fifteen coins now have a market capitalization above $1 Bn, with Tezos (XTZ) being the latest addition to that exclusive club. NEO (NEO) and Ethereum Classic (ETC) weekly gains have solidified their permanence in an upcoming future, and NEM (XEM) is the next coin in line, in the better position to also receive that distinction.

Market Forecast

The strong correction in the 5th of September left some ugly scars in the recovery path of Bitcoin. However, some good signals have started to arise from the charts and, despite the potential scenario of an even stronger correction, we look to the future in a more optimistically way, when compared to one week ago. The first relevant insight is the prominent role that the $6,000-6,200 range has been taking in the support of the price action and the ability of the market to pierce the first line of resistance.

Nevertheless, the volume is showing symptomatical symptoms and fading out. It will be needed from investors and traders a more prominent interest and action if we desire to surpass the following lines of resistance. The chart structures that arise from our technical analysis don’t forecast an easy upward channel for Bitcoin to climb. Strong corrections may hit the market as we yet didn’t have signs that bears lost the dictating role in the price direction evolution.

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Bitcoin Technical Analysis & Trade Ideas


[switch between the Technical / Trade section below]

Technical analysis

As usual, we start this section by looking at the daily chart for the BTC/USD prices, as provided by Bitfinex.

Market Trends & Structure

$6,000-6,200 range performed its role accordingly and sustained a favorable evolution of prices. The last attempt by bears was quickly countered and ignited a price escalation, although in a phased manner. Price action is now approaching the Ichimoku’s cloud and the downward trend lines projected from several months ago. Also, shorter-term moving averages are now acting as support for the price action, after the eventual bullish cross between them that took place during the beginning of the week.

But we are far from a healthy charts’ profile. Those moving averages, along with the longer-term ones, are still bearish in their slope – although 50-EMA appears to be the first one to attempt to reverse that pattern. Ichimoku’s cloud is still bearish above and ahead of the market, although it is continuously narrowing down week after week, and lagging span has now a wider gap to the Kumo, making it harder to flag a strong entry signal. Bollinger Bands are narrowing, with the price at close distance to its upper bound – to be fair, between the midline and the positive standard deviation borderline.

So, overall, several resistance indicators are developing around the $6,800 (we could just add the 38.2% Fibonacci retracement slightly above it, as well) but, to the downside, we are also starting to draw some supporting lines: 50-EMA and 50-SMA, 61.8% and 78.6% retracements, which place the $6,400-6,500 and $6,000-6,200 areas back on the charts. On the way up, $7,000 always acts as a psychological threshold and $7,400 is the most recent local high to reach, with the $7,900 upper edge of Ichimoku’s Cloud already sounding unplausible to attain in the short-term.

Volume

Despite the signs of recovery and weekly gains, volume charts don’t mesmerize us. The recent upturn that OBV took pierced the triangle formation, but the low-volume we are experiencing this weekend is making it fade back to the converging channel. Accumulation/Distribution and Klinger had an approximation to their moving average during the past weekend and now evolved to a positive slope. MFI had a huge crossover through its average, clearly lagging to the smoothed signal, and almost hit the oversold territory before starting to regress to the mean.

All look like healthy signs of recovery but the volume’s moving average is failing to follow that path so we remain cautious to see if the positive evolution will eventually find in the volume the final confirmation signal that we need in our most conservative setups

Momentum

After a quick surge of prices, Stochastic easily reached oversold territory. Its quick and oscillating behavior, edge-to-edge, is becoming a trademark of the market regime we are experiencing. Willy’s is still managing to reach its midline, although its smoothed signal has finally turned bullish. MACD was moved into the positive ground, and Awesome Oscillator developed the same pattern of evolution but still lagging behind at reaching that threshold.

Aroon Up quickly reversed and glued to the upside, but Aroon Down is failing to drop below to reach a perfect bullish structure. Finally, PPO’s Laguerre is sailing no man’s land, although with a slight bias to the upside, narrowing down the gap to imminent oversold signals.

Final Remarks

If we rewind back one month, the setup isn’t much different from what we are experiencing at the moment. However, back then, we had a more consolidated sideways market, and with a more pronounced low volatility. Now, the panorama is the aftermath of a turbulent period, and the market is starting to show signs of recovery after testing again the $6,000 mark, although is starting to develop the same symptomatic behavior on the volume side of the equation.

Overall, the technical indicators for volume are progressing and indulge some ground for improvement. Momentum also has a gradual positioning to positive territory, despite Stochastic hitting so prematurely oversold levels. However, the margin of progression isn’t huge, and we forecast some difficulties in surpassing the next resistance lines. So, once again, we repeat ourselves and paraphrase last week’s report conclusion: “Although we looked into the charts in an optimistically way for the past couple of days, the weakening of the traded volume placed our position in a more vulnerable way. Technically, momentum has plenty of room to improve, but it can also revisit quickly oversold territory again, in a dead cat bounce setup. In that scenario, expect the correction to bring us to the $6,000 mark or even to mid-high $5k levels. Given the short distance to the strong resistance, the reward ratio this time may not promote from us a long entry until we see a solid trend, confirmed with an increase in the traded volume.”

Trade ideas – Market entry/exit values.

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Week Highlights


 

 

 


 

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