Market Commentary


 

In the past two months, Bitcoin markets experienced a reduced volatility period, trading exclusively in the range $6,200-6,800. With trading volume reducing gradually with time, it was expectable that the established sideways movement would give rise to another turmoil period in the short-term. After an unusually long wait, on the last Wednesday, 14th of November, Bitcoin price finally slumped and achieved a year-to-date minimum of $5,432 – a value that was established on the following day (cf. Bitfinex tick data).

As we entered the weekend, the plunge dampened and, after a succession of daily higher lows, Bitcoin price appears to be recovering slightly, although in a fragile and extremely discrete fashion. At the time that this report is being written, BTC/USD is trading at almost $5,650, with volume figures abnormally low for this time of the season.

Overall, the rest of the other coins and tokens that comprise the crypto-ecosystem also took a dive (with a small bunch of exceptions) but it wasn’t an impressive correction. Usually, the amplitudes of their movements outperform the Bitcoin one and, in this case, they stood almost on par with the major cryptocurrency. The main exception was Ripple (XRP), with weekly gains of 2.4%, now trading at $0.518. Also, with the negative performance of Ethereum (ETH) which lost over 16% in the last week, Ripple achieved to consolidate its 2nd position in the market capitalization ranking.

 


Latest News


 

The bitcoin cash hard fork took place yesterday at 18:02 UTC. The fork split bitcoin cash into two chains. There is the original version of bitcoin cash known as Bitcoin ABC. This is the protocol that has been used since bitcoin cash was created last year and whose proponents argue that the basic structure is “sound” and “does not need any radical change.” The second chain, Bitcoin SV, looks to restore retired code from the original Bitcoin protocol and increase block size from 32 MB to 128 MB. Link

Bitcoin futures tumbled 13 percent on Wednesday, trigging the limit down level on the CME Group exchange. The futures drop came as the price of bitcoin and other major cryptocurrencies dropped substantially. The pause in trading came just before 2 p.m. Eastern Time where a two-minute observation was initiated. The futures contracts have a 20 percent hard limit, meaning they cannot trade below that level. Link

A number of major cryptocurrency exchanges have already added support for both new bitcoin cash tokens. Binance has already issued bitcoin cash owners their new tokens. It awarded 1 BCH ABC and 1 BCH SV token for each bitcoin cash token users had at 4:40 p.m. (UTC) on November 15. Bitfinex and Poloniex have also said they have made the shift to the new cryptocurrencies. Link

Coinbase Ventures has invested in Coinmine, a startup that wants to make it easier for non-technical people to mine cryptocurrency. The Coinmine One, a mining device that consumes less energy than a Playstation, went on sale Wednesday. Coinbase Ventures, along with others, have put about $2 million into the San Francisco-based company. Link

Power Ledger, an Australian startup that recently won Richard Branson’s Extreme Tech Challenge, plans to start selling fractions of renewable energy plants. The company will use the blockchain to sell portions of a commercial solar farm and a grid-connected battery project. The firm will use cryptocurrency tokens to act as shares and is believed to be the world’s first regulated crypto energy offering. Link

Plans are afoot in India to ban cryptocurrencies. While it is as yet unclear what exactly the government’s move against cryptocurrencies will be, what is clear is the fact that implementing it is going to be incredibly difficult. Link

Lolli, a bitcoin rewards program, has raised $2.25 million in seed funding. The money comes from Bain Capital Ventures and Digital Currency Group, among others. Lolli allows users to earn bitcoin when they shop at the company’s more than 500 partner brands, including Hilton, Walmart, and Forever 21. The company claims that it will give users “up to 30 percent” of their purchase back in bitcoin. Link

International Monetary Fund (IMF) head Christine Lagarde says central banks around the world should consider issuing digital currency. “I believe we should consider the possibility to issue digital currency,” Ms Lagarde said in a speech at a conference in Singapore. “There may be a role for the state to supply money to the digital economy.” Link

Taiwan Will Issue Draft ICO Rules by June 2019, Regulator Says. Taiwan plans to release draft Initial Coin Offering (ICO) regulation by June 2019, local English-language daily news outlet Taipei Times reported Tuesday, Oct. 23. The publication quoted plans from Wellington Koo, chairman of Taiwanese finance regulator — the Financial Supervisory Commission (FSC) — who was speaking at a meeting of the Legislative Yuan Finance Committee.

 


Crypto Weekly Charts


Total Market Capitalization

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Top 20 by Market Cap

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Bitcoin Volume / Exchange

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Top 20 by Volume – 1d, 7d, 30d

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Percentage of Total Market Capitalization – Dominance

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Bitcoin Market Overview & Forecast

On the 14th of November, Bitcoin price finally slumped and, in less than a 12 hour period, lost over 500 points. Counter-movements were shy and ineffective and so, on the following day, that correction kept going until we reached $5,432, a moment where we finally saw a neat response from the bulls. Without being impressive, that bounce brought prices up to the previous year-to-date minimum, of $5,755 and price then started to move, once again, in a sideways fashion, somehow consolidating the previous intensive price action.

Bitcoin dominance has slightly increased in the past weeks. By 12th of September, it reached a local high of 57,96% and since then it has been retracting down to the 50% mark, and, eventually, the trend reversed again. Now, after this turmoil period, it stands at 52.5%, with Ripple (XRP) dethroning Ethereum (ETH) in the 2nd position of the market capitalization ranking, while still exhibiting a weekly net gain of 2.4%. XRP is, at press time, trading at 0.518 against the US Dollar.

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Market Overview

The Week in Numbers

We start this week’s analysis by looking at the 4-hour chart of Bitcoin, as provided by Bitfinex.

For several weeks, Bitcoin price was enclosed in a bounded trading channel. In fact, since the major correction that hit the markets in the 5th of September, BTC/USD has been negotiating in the $6,200-6,800 range. As time passed by, that trading channel narrowed and liquidity dropped severely. First, it was the lower bound of the trading range to increase slightly as we attempted (more than once) a breakthrough on the $6,800 level. With successive rejections at that resistance, the upper bound of that range started to decrease. Last weeks, the limits of the price action were established around a reduced channel, between $6,400 and $6,500.

Finally, on the 14th of November, Bitcoin price finally slumped and, in less than a 12 hour period, lost over 500 points. Counter-movements were shy and ineffective and so, on the following day, that correction kept going until we reached $5,432, a moment where we finally saw a neat response from the bulls. Without being impressive, that pullback brought prices up to the previous year-to-date minimum, of $5,755 and price then started to move, once again, in a sideways fashion, somehow consolidating the previous intensive price action.

Percentually, the drawdown at some stage translated into a 16.19% correction of Bitcoin price. As we entered the weekend, the plunge dampened and, after a succession of daily higher lows, Bitcoin price appears to be recovering slightly, although in a fragile and extremely discrete fashion. At the time that this report is being written, BTC/USD is trading at almost $5,650, with volume figures abnormally low for this time of the season.

Market Capitalization and Dominance

2,081 cryptocurrencies now comprise the digital ecosystem, altogether summing up a global market capitalization of $185.4 Bn. In the last 24 hours, the volume traded in all the 15,891 markets reached the $13.0 Bn mark.

Bitcoin dominance has slightly increased in the past weeks. By 12th of September, it reached a local high of 57,96% and since then it has been retracting down to the 50% mark, and, eventually, the trend reversed again. Now, after this turmoil period, it stands at 52.5%, with Ripple (XRP) dethroning Ethereum (ETH) in the 2nd position of the market capitalization ranking.

Best and Worst Weekly Performers

Looking into the most traded assets of the past seven days (excluding BTC and tokens), it is clear that the Bitcoin plunge affected the majority of the crypto-markets.

The highlight of the week goes to Ripple (XRP) with gains of 2.4%, now trading at $0.518. Also, with the negative performance of Ethereum (ETH) – apart from Bitcoin, the most traded cryptocurrency in the past 7 days -, which lost over 16% in the last week, Ripple achieved to consolidate its 2nd position in the market capitalization ranking.

In the bottom line of the performance spectrum, Bitcoin Cash (BCH) lost almost 30% of its net value, but, in this case, we have to highlight the fact that it has experienced a hard-fork during midweek, on the 15th of November, leading to the creation of two distinct assets, Bitcoin ABC and Bitcoin SV (NDR: here BCH corresponds to Bitcoin ABC; the other modality is designated Bitcoin SV).

Market Forecast

Despite we have skipped some editions of this weekly report, our attention hasn’t been withdrawn from the markets. Volume was fading out, the price was negotiating in a tight range, and that sideways behaviour didn’t appear to have an end. With market lacking interest we had to focus our resources on our participation in some conferences and meetings. To the reader used to the weekly brief our honest excuses.

In the last editions, we have raised several flags concerning the market’s behaviour, and the frequent reader should recall our recommendations. Weeks ago we were already stating that BTC/USD price action looked a bit fragile and that a bullish run up to the $6,800 level would probably hit the wall again, adding an extra difficulty degree in the bulls’ aspirations. Also, the statement that “the volume is showing symptomatical symptoms and fading out” was another caveat of a possible market collapse.

We did by then, opted out for a conservative approach, but alerted that a sustainability of the prices was hard to achieve, especially if every revisitation of a hard limit theoretically weakens their defences. “Yet another failure on that pierce and bears will easily try to push the price action back to the $6,000-$6,100 level” was a sentence taken from our last report, more than 3 weeks ago.

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We do remain optimistic about the future, and in our internal talks, we still refrain ourselves from mentioning $2k or $3k levels. EMA-200 on the weekly chart by $4,400 and SMA-200 by $3,000 are our benchmarks for optimal entry zones, although we are not that inclined that they will indeed emerge as prominent levels in the upcoming days or weeks. It is still not clear that we have reached a bottom, and we allocate still a large figure for the possibility of breaching down the $5k mark, especially if the volume figures remain so low.

Nevertheless, the market conjecture allied with the number of bullish news that is striking the market in the past weeks makes us believe that a final correction may be possible, but probably not as magnanimous as the last one. Or it may not happen at all, and markets will start soon a recovery until the end the year, placing prices in a more optimistic plateau. The proximity of Bakkt custody solutions, ETF emerging in Switzerland, BitGo, or Fidelity interest in crypto-markets, are all fundamental news that we believe may back a solid bull run and legitimate the interest of even more investors.

We will keep a steady eye on price evolution and, when the technical conjecture looks more appealing, we will surely paste, in our Slack channel, our trading recommendations. In the meantime, faites vos jeux and happy trading!


Bitcoin Technical Analysis & Trade Ideas


[switch between the Technical / Trade section below]

Technical analysis

We start this section by looking at the weekly chart for the BTC/USD prices, as provided by Bitfinex.

Market Trends & Structure

When an asset establishes a new year-to-date low it makes harder for technical analysis to predict (or at least estimate) its future upcoming movements. Being, by construction, based on historical data and patterns, we need to recover older candlesticks and views that usually don’t reflect as well the most recent price action, or reproduce exactly the same market conditions. For that reason, this week we start with the weekly chart, as opposed to our usual daily view.

With its latest correction, BTC/USD easily pierced the psychological barrier of $6,000 and even the latest year-to-date minimum of $5,755.5. The latest weekly performance has also deteriorated shorter time frame moving averages, with the simple one depicting a bearish slope already. Long-term moving average remains bullish, but the 200-EMA is almost flattening out. Ichimoku’s cloud remains bearish ahead of the market, with its lag line still hovering above the thin Kumo.

One of the downward trend lines that we have traced several months ago still remains valid for the time being, with only one slight breach from one wicket in the previous month. However, the upward trend line remoting from the middle of last year appears to be already invalidated by the latest correction. Bollinger Bands have narrowed down almost to the order of magnitude of the latest candle body size and volume figures keep the continuous downward trend since its apex in March of 2018.

Volume

Daily traded volume is, on average, retracting and falling again to apathetic figures. On-balance volume took a huge dive, detaching itself from the slightly bearish trend line, with Klinger and MFI following the same curved pattern.

Accumulation/Distribution also took a plunge but reacted quickly and easily approached its moving average, although through its below side. Sunday’s upward movement until press time may be forcing Klinger to approximate its average but is still lacking presence in the A/D line behaviour.

Momentum

Despite all the negativism of the latest correction, if we look into BTC/USD momentum indicators, we get some signs of relief. RSI is gently approaching oversold territory and Willy’s leading signal has already turned to the upside, quickly approaching its moving average, prospecting for a potential crossover. Also, PPO Laguerre is already flashing some buy signals, although we usually wait for a few more extra bars as a sign of confirmation.

On the other hand, MACD and Awesome look heavily bearish and will need a few days to recover if they intend to drive the price action away from oversold territory. Aroon Down has detached itself from the top but we are still lacking the up twist of Aroon Up so that we can establish a recovery path.

Final Remarks

Every extensive drawdown leaves scars in the technical profile of an asset. Bitcoin isn’t an exception. Deterioration of moving averages, fall of support levels, and extended recovery time of momentum curves are all negative factors that will prevail at least for some days in the analysis of chartists and investors. While we see some potential good conjecture for momentum, the apathetic figures for volume withdraw from that suppositions the extra credibility needed for a solid re-entry in the market.

Trade ideas – Market entry/exit values.

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Week Highlights


 

 

 


 

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