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Bitcoin Drops Amid Risk-Off in Global Markets
BTC: Price: $8,000 | MCAP: $144.22 Billion | 24-Hr Volume: $16.10 Billion
Short-term trend: Bearish
Bitcoin has come under pressure in the last 24 hour and looks set to retest recent lows near $7,750 amid risk-off mood in the global markets.
As of writing, the futures on the S&P 500 are down 0.25%. UK's FTSE index and other European indices, except Germany's DAX, are also flashing red. Further, Asian markets witnessed risk aversion and a modest rise in safe havens like the Yen and Gold.
The flight to safety could be associated with concerns of deeper slowdown in the global economy and the escalating political tensions between the US and China.
Many consider bitcoin a haven asset. A recent study, however, showed majority of cryptocurrency traders are just thrill seekers. BTC, therefore, is a risk asset and could remain under pressure due to the risk aversion in the global markets.
Also, technical studies are reporting a bearish bias. Notably, the weekly Chaikin Money Flow (CMF) which incorporates both prices and trading volumes to gauge buying and selling pressure, is currently printing a value of -0.14 – the lowest since mid-February.
A below-zero reading indicates that selling pressure, or the capital flight from the bitcoin market, is much higher than the buying pressure or inflow.
Put simply, the indicator shows the market is now at its most bearish since February and the path of least resistance for bitcoin is to the lower side.
BTC, therefore, risks falling to $7,750. The bearish case would weaken if prices rise above the 200-day average, currently located above $8,700, although as of now, that looks unlikely.
Long-term trend: Bullish
Bitcoin's long-term outlook is bullish, as mining reward halving is due in May 2020. The bullish case looks stronger if we take into account the strengthening narrative that the top cryptocurrency is a digital gold and a hedge against inflation.
Many observers believe the negatives interest rate era could force traditional investor to pour money into cryptocurrencies. After all, BTC is the best performing asset of 2019 and possibly of the decade.
Technical charts, however, are reporting conflicting signals. To start with, the 100- and 200-period averages have produced a bullish crossover on the three-day chart. A similar bull cross in March 2016 was followed by a 21 month bull market.
The bullish case, however, looks weak on the longer duration charts. Bitcoin closed below $9,049 on Sept. 30, confirming a bearish inside bar candlestick reversal on the monthly chart.
The cryptocurrency had charted consecutive inside bar candlesticks in July and August, indicating indecision or consolidation.
The tug of war between the bulls and the bears ended with a 20 percent drop in September. Further, the weekly relative strength index is now reporting bearish conditions with a below-50 print.
The bearish candlestick arrangement takes precedence over the bullish crossover on the three-day chart, as the latter is a lagging indicator. Furthermore, the cryptocurrency was sidelined for weeks following the March 2016 bull cross and the bull market had resumed at the end of May 2016.
Put simply, BTC could suffer a deeper drop to $7,200, as suggested by the monthly chart, before resuming the bull market.
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GXChain First Bull Signals In 74 Days
GXC: Price: $0.54 | MCAP: $35.9 million | 24-Hr Volume: $22.9 million
Short-term trend: Pullback
GXC is up 19.13 percent after breaking bullish from a 17-day channel range between $0.39 and $0.52 before closing just beneath the 50-day moving average.
The awesome oscillator (AO), an indicator of momentum and trend, has given its first bullish signal with a green histogram bar move above 0, the first of such an instance since Aug. 4.
That signal has been backed by the daily RSI moving above the neutral 50 line on Oct. 14. The onus is now on the bulls to retain the higher low above prior resistances at $0.5257 otherwise risk a pullback in the immediate short-term.
Long-term trend: Neutral
Whether a continuation is possible remains to be seen as the reversal from $0.27 on Sept. 25 has only just begun.
A firm close above the 50-day MA and prior supports at $0.69 is needed to reverse on-going bearish conditions from Aug. 6.
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| Chainlink On The Slide
LINK: Price: $2.31 | MCAP: $199.5 million | 24-Hr Volume: $63.2 million
Short-term trend: Pullback
LINK has encountered an area of major resistance from its initial breakout which hit a wall between $3.10 and $3.12 on Oct. 6.
Down 9.2 percent, the indicators are pointing south as the RSI begins to cross neutral 50, while the AO is flashing signs of a deeper drawdown from recent peak highs at $3.1258.
Long-term trend: Neutral
Momentum is now driving price action toward the 100-day moving average, located at $2.18 amid decreasing/flatlined volume bars which could prove crucial in the coming days as sellers become exhausted on the intial 100-day MA test.
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Bitcoin is losing altitude at press time and could drop to levels below recent lows near $7,750, as predicted by a few observers.
The dip, however, would be an opportunity for investors to board the bitcoin freight train, according to popular analyst @100trillionUSD.
Bitcoin's blockchain is set to undergo mining reward halving in May 2020. In the past, markets have priced in the impending supply cut well in advance.
For instance, BTC jumped from $5 to $12 in six months before the November 2012 halving. Also, prices rallied from $350 to $650 in six months leading up to the August 2016 halving.
So, if history is a guide, BTC could pick up a strong bid after the first half of November and rise to record highs before the May 2020 halving.
What is mining reward halving?
Mining reward halving is a feature programmed into bitcoin's blockchain to occur every four years (210,000 blocks). Once that number is crossed, the reward for mining on the blockchain is reduced by 50 percent.
The process is aimed at curbing inflation by reducing supply. Essentially, miners will be adding fewer bitcoins to the ecosystem after the May 2020 halving, possibly leading to supply deficit.
Hence, many observers believe bitcoin is deflationary in nature as opposed to fiat currencies like the US Dollar, Euro, Yen, whose monetary base seldom decreases.
Further, it can be said that bitcoin's monetary policy is fixed, which gives it an edge over fiat currencies. After all, the monetary policy stance of Federal Reserve and other central banks keeps changing according to economic conditions, leading to uncertainty in financial markets and economy. |
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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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Bears In Control