This week saw the cryptocurrency market move more into an uptrend as prices appreciated across the market. For much of 2018, prices have been spiraling downward but just below the $6,000 price point may be the low point for Bitcoin this year. The overall cryptocurrency market capitalization has risen about 6% over the past seven days.
The pattern this year has seen a correlation between the movement of Bitcoin and altcoins, with altcoins underperforming when bitcoin is dropping and altcoins outperforming when Bitcoin is rising. This pattern had broken down over the last month, as we witnessed a bloodbath in the altcoin market. Even when Bitcoin was holding its price or rising, altcoins continued to depreciate. This was most likely due to investors losing confidence in altcoins, and money moving out of altcoins into Bitcoin or fiat currency.
However, this week has seen a return to the usual pattern with altcoins closely following the movements of Bitcoin. It has been mostly upward movement this week as bullish investors return to the market.
Important News Developments
Yahoo Finance has integrated cryptocurrency trading to their services. Users of the service now have options to buy and sell Bitcoin, Ethereum, and Litecoin. This service will develop a new route for fiat money to enter the cryptocurrency market and is a good development for both investment into and adoption of cryptocurrencies. Yahoo has plans for a cryptocurrency exchange to be launched by their Japanese branch in July 2019. This will be one of the first major search engine companies to launch an exchange.
The SEC has rejected a total of nine Bitcoin ETF’s so far. August 23rd was the scheduled decision date for the ProShares ETF proposal but the rejection decision arrived on August 22nd. There has been much speculation about the positive impact of a Bitcoin ETF on the cryptocurrency market, with many believing it will lead the way for institutional investors. A VanEck ETF decision will be upcoming in September and stands a better chance of being approved than the previous nine. VanEck is proposing to back the ETF by real Bitcoin, which will be a much more secure instrument to trade. Investors, traders, and stakeholders in the cryptocurrency market should closely monitor for the decision on this ETF which is scheduled to be announced sometime in September. Read Article
Bittrex is expanding its crypto-fiat pair offerings. Back in May, Bittrex announced it was going to start offering fiat pair trading to certain customers. The initial customers who were going to be offered fiat pair trading were corporate clients and it was going to develop from there by asking some retail traders to try the products. The initial products offered included Bitcoin, USD Tether, and True USD. Since then, Ethereum and others have been added. During the week, Bittrex announced that it will be adding Cardano and Zcash to the offerings. This is an important development for these cryptocurrencies and will serve to add further liquidity to the market for them as well as more routes for fiat to enter the cryptocurrency market. At the moment, corporate clients and retail investors need to fill out forms to request to participate in fiat trading on Bittrex. Zcash and Cardano are scheduled to be launched on the 5th of September. Price has not made any significant moves on the news.
Bitcoin Price Analysis
The week has been a bullish one for Bitcoin. We have seen price move from the low $6000’s to push past resistance at $6850 and rise above $7000. Both a bullish and a bearish scenario can be seen for the price of Bitcoin, and investors should be prepared for both.
On the bearish side, we are seeing a head and shoulders forming. The head and shoulders are shown by the arrows on the below chart. If this pattern follows through and executes properly, it indicates that Bitcoin is going to return to sub-$6k levels and drop hard below. If this happens, $6k will likely turn from a support level to a resistance and it will take a lot of buying pressure for the price to rise back above. Another pattern which is supporting this bearish view is the descending triangle pattern which has been forming since January. This is a powerful pattern and would also indicate a hard drop below $6k.
Bitcoin Daily Chart
On the bullish side, we have been seeing both price and RSI forming higher highs and higher lows since early this month, which is indicative of the start of an uptrend. Price rises have been on larger volume than the drops we have been seeing, showing there is more strength behind the bullish movements. The MACD is also performing a centerline crossover to the upside and is continuing to diverge to the upside. This is indicative of buying pressure increasing. Bitcoin futures are also trading at a discount to Bitcoin spot price. When Bitcoin futures are trading at a premium to the spot, miners sell the futures to lock in a profit ahead of time. This applies additional selling pressure, but with futures currently trading at a discount, this selling pressure is not on the market. Overall, there are many signs indicating that we are at the start of an uptrend and that there will be further bullish movements from here.
Bitcoin Spot Price, Bitcoin September Futures, Bitcoin December Futures
Ethereum Price Analysis
Despite Bitcoin’s bullish movements of recent, the movements in Ethereum have been starkly different. Ethereum is trading near its lows of 2018 at around $280. This is an important point as it is also the point where the price of Ethereum started to increase exponentially in November. Since then, we have seen a sharp sell-off in Ethereum during 2018 bringing us back close to the point where the euphoric buying began. With Ethereum being the market leader for altcoins, it is indicative of the altcoin market as a whole which has undergone sharp sell-offs since the beginning of the year.
With Ethereum increasing from around $280 in November to around $1400 in January, the sell-off of 2018 makes sense with mostly speculative money driving the price up. Those who followed the advice of HODL during 2018 suffered sharp losses. Anybody who converted into fiat or Bitcoin earlier in the year would be able to buy in for a larger amount of Ethereum.
Despite the bearish price action, there are some technical indicators which point to an upward movement from here. The MACD is starting to converge showing that selling pressure is falling off. We are at the key point where price started to make euphoric rises so the buyers who remain may be unwilling to sell. We also have price and RSI starting to make slightly higher highs and higher lows which may signal the start of an uptrend.
Ethereum Daily Chart
“Altcoin of the Week” Price Analysis – EOS
EOS has recorded a strong week after making some of the largest appreciations in the top ten cryptocurrencies by market cap. Over the course of three days during the week, the price of EOS increased by almost 30%.
EOS has been on a downward spiral since its mainnet launch in June, as investors reevaluate the fundamental utility of the project. Coined the “Ethereum Killer” during its year-long ICO, EOS is a platform which aims to make blockchain scalable for businesses. The token reached highs of above $22 coming up to its mainnet launch as anticipation for the project built up. Around the time of the mainnet launch, the token was trading at around $14 but has been on a downward spiral since then, trading below $4.5 at one stage.
The outlook was extremely bearish for EOS for a long time as it showed no signs of undergoing a recovery. Even on days when the market as a whole was undergoing bullish movements, EOS continued its sharp drops. However, this week EOS has finally shown some signs of bottoming out and may record more bullish movements from here. Upward movements have been larger in volume than losses, showing more strength behind the buyers at the moment. We also have the MACD converging and approaching a centerline crossover towards the upside. This is representative of momentum shifting from the sellers to the buyers. RSI and price have also been forming higher highs and higher lows. $7 will be a key level for the price of EOS and a big test for whether price action can overcome this point if it continues its bullish movements.
EOS Daily Chart
The Weeks Ahead
As we go into September, the relationship between Bitcoin and altcoins appears to have returned. Bitcoin deserves increased attention from traders and investors, as it is likely to be indicative of movements in the market as a whole. If the bearish scenario for Bitcoin plays out, sharp depreciation would be expected across the market. However, with many signs pointing towards bullish movements, September will likely be a month which will reveal a lot about how the rest of the year will go for cryptocurrency market prices.