This week was slightly more bullish for the entire cryptocurrency market. BTC and altcoins are making a relief run after latching onto strong support at high liquidity zones. One big problem is that although volume and price volatility indicate this is a relief rally, many will succumb to this bull trap.
Of course, there is a possibility that the market has bottomed and it will just go up, up, and away from here. However, there is no strong evidence that this is in play. Weak volume, NVT is still relatively high, and we haven’t gotten the spike in coin days destroyed to confirm the bottom.
An important point of discussion is that you don’t need to ever catch the bottom. A good investor/trader knows that playing on the trend and clear signs in price action are much more fruitful over the long term. Trying to catch every knife at the top and bottom is a recipe for disaster.
Not much fundamental activity in the market since the last update. EOS has exhibited strong price action after the SEC gave them a simple slap on the wrist for their $4 billion ICO. A lot of people believe we will now see a resurgence of ICOs (through IEOs) owing to the SEC’s complacency in this matter.
Ethereum’s Istanbul hard fork was implemented earlier than expected on the Ropsten testnet. This caused the chain to split as there were groups of nodes and miners that weren’t expecting Istanbul parameters when the fork occurred.
Bakkt is playing out as I expected, but it is on the receiving end of a lot of FUD due to common misperceptions. If you want to understand what Bakkt is actually supposed to do, read this article [link this to Bakkt bitcoin futures article].
Bitcoin price has been very much consistent with what was expected in the last review. I still maintain that the bottom is not in, but – obviously – it is possible that it already has been set in. This unlikely theory is slightly supported by two daily wicks to the same region.
BTC is currently finding support near the $8,220 region. If this support holds, we can see a short term burst to $8,800-$9,000. This move is also consistent with the long term thesis that this is a relief rally.
As the Bitcoin price moves further and further up, it entices more short sellers to start entering positions again. The most important data point at this stage is volume. Small volume on red candles and increasing volume on green candles will all but give away the end of this corrective phase.
On a more short-term note, the four-hour timeframe more or less confirms that BTC is finding strong support.
The lack of key regions created by ETH on its way down means that the next strong support comes in near $198-200. $184 can act as a resistance and a sudden attack from shorters there may spell a potential bull trap on ETH.
The longer-term thesis is still in play for ETH here. Considering it looked like it bottomed out before, that may have been the fake-out that led to the drop to $150. In all honesty, ETH has a higher chance of having bottomed by now than any other coin.
Others like LTC and BCH are still above their trend line because of the sheer depth of the parabola created while the correction began; so all hope is not lost for altcoins.
Ripple’s monthly escrow wallet just released one billion tokens. That means it’s nearly time for the monthly mega-dump.
XRP looks primed for a move to the $.27-.28 region, but considering it isn’t too far from the current price, it isn’t worth even entering a leveraged long (mediocre risk-reward).
Ripple released their OTC sales separate from the monthly escrow. This confirms that the escrow tokens will once again be sold to exchanges and dumped on the open market. This, as well as the FUD it creates, can serve as fuel for XRP’s move back down to $.2 for a yearly low.
The market is expected to move upward, but it’s important to stay within context and not get caught in a bull trap. For those who are simply using dollar-cost averaging (DCA), continue doing so while these levels last and ignore short term noise.
When the market moves down is the best time to accumulate. Opportunities like this will feel like a gold mine in a few years.