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Rally Paused Near $9,300
BTC: Price: $9,260 | MCAP: $164 billion | 24-Hr Volume: $16.14 billion
Short-term trend: Minor correction likely
Bitcoin is struggling to find acceptance above $9,300, having rallied more than 17 percent in the previous week.
Notably, short duration technical charts indicate the buy volumes have been consistently lower than the sell volumes over the last four days. As a result, prices could fall back to $9,000 over the next day or two, unless trading volumes rise.
Acceptance below $9,000 would expose key rising trendline support, currently at $8,700, as per the hourly chart.
On the higher side, a high-volume move above $8,300 would imply continuation of the rally toward $10,000, as suggested by long-term technical charts.
Long-term trend: Bullish
BTC’s previous three-day candle closed above the high of $9,006 hit on May 30, establishing another bullish higher high. It is worth noting that the cryptocurrency has charted a series of higher lows and higher highs since early February.
Further, BTC closed last month with 62 percent gains – the highest since August 2017 – reinforcing the falling wedge breakout confirmed by April's candle.
The 5- and 10-month moving averages have produced a bullish crossover for the first time since September/October 2015.
Validating the bullish view put forward by long-term technical charts is the surge in open interest – a sign of increased institutional activity.
The open interest in futures listed on the Chicago Mercantile Exchange – the number of contracts or commitments outstanding in futures at a given point of time – jumped to a record high of 5,311 contracts or $250 million on June 17 and hit a new lifetime of 5,391 on the following day.
More importantly, the open interest is currently up nearly 80 percent from the levels seen in June 2018.
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WAX At A Crossroads WAX: Price: $0.10 | MCAP: $72.06 million | 24-Hr Volume: $2.1 million
Short-term trend: Neutral-slight bullish
Up 6.11 percent over a 24-hour period, the trend has finally stopped out at the gap resistance we mentioned earlier in the week as it halted its advance at $0.10.
The challenge for the bulls now resides in attracting on-going capital, needed to spur investor interest and to close out above prior highs (marked red), should they hope to continue its recent bull rally.
Long-term trend: Bullish
The lessening peaks in the Chaikin Money Flow (CMF) is a welcome sight for buyers who would like to see greater liquidity and volatility in the form of bullish momentum backed by sustainable growth on the 4-hour chart.
The daily chart, however, shows a strong upward trend is beginning to form, with the current daily candle offering up a higher low continuation pattern.
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Grin's Not Smiling, Just Yet GRIN: Price: $5.97 | MCAP: $77.2 million | 24-Hr Volume: $38.1 million
Short-term trend: Pullback
GRIN's incredible 73-day run-up has seen an increase of more than 200 percent over that time and now points toward a period of profit-taking.
However, the trend is beginning to form a local area of resistance, opening up the possibility for a continuation on the back of an ascending triangle formation.
The bulls should mind the Chaikin Money Flow as it demonstrates greater selling pressure is about, however, should this begin to tick up, take it as a signal that the bulls are looking for another move.
Long-term trend: Bullish
The long-term trend remains very bullish given the current market formation on the 4-hr and daily charts. A close below $5 would threaten the bullish advance, but that would require a huge amount of downward sell pressure, which at this point, seems a little out of reach for the bears.
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Mining reward halving – a process designed to curb inflation by reducing the rewards for mining on bitcoin's blockchain by half every four years – is proven to have a long-term positive effect on the cryptocurrency's price.
Historical data shows the cryptocurency tends to bottom out and break into bull market a year ahead of the reward halving and continues to rally following the event. This is because halvings create supply deficit by reducing mining rewards by 50 percent.
The next mining reward halving is due sometime in May 2020 and the cryptocurrency has rallied sharply a year ahead of the event. The price is currently up 150 percent on a year-to-date basis.
Many experts argue that the law of diminishing returns will take effect and the cryptocurrency may not rally as hard as it did after the 2016 reward halving.
While that may be true, investors should also consider the possibility of a spike in adoption rate in 2020. After all, Facebook's cryptocurrency Libra could go live in the first half of 2020. Hence, BTC could see a staggering price rise if Libra boosts its adoption rate (demand side pressure), leading to a bigger supply deficit following the reward halving. |
Gold prices rose to $1,393 per Oz earlier today, the highest level since 2013.
Bitcoin traders may take heart from the fact that the yellow metal is rising. After all, bitcoin is widely referred to as digital gold and could follow gold higher.
Historical data, however, indicates the two assets tend to move in opposite directions. For instance, on Nov. 14, BTC dived below the long-held support of $6,000, reviving the bear market which had come to a halt near that psychological support in five months to October. By mid-December, BTC was trading at 15-month lows near $3,100.
During the same time frame, gold went from $1,200 to $1,300 and further extended the rally to $1,346 (Feb. 20 high).
Further, by early May, gold was roughly down 6 percent from February highs, while BTC was trading at $5,500, representing a 76 percent rise on December lows near $3,100.
So, if history is anything to go by, then the rise in gold is bad news for bitcoin.
That said, the leading cryptocurrency may suffer losses this time, as market sentiment is bullish with mining reward halving due next year. Further, Facebook's foray into cryptocurrencies is being viewed as the biggest tail wind for bitcoin in 2020/21.
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| Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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Record Open Interest