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The market data is provided by the HitBTC exchange.
Michael Novogratz, founder of the digital asset management firm Galaxy Digital, has recently reiterated his view that cryptocurrencies have hit a bottom and a rebound is due. He believes several institutional players might invest in the market, boosting prices.
It, however, will be a slow grind higher. We have also been maintaining that the rally this year will be a gradual upward move, unlike the vertical increase seen in 2017.
Another billionaire investor, Tim Draper is unperturbed by the continuous decline in crypto, viewing it as a buying opportunity and sticking to his target of $250,000 by 2022. In regards to the news, the hack of a Japanese crypto exchange Zaif has not resulted in any panic selling, which shows that the bears are currently unable to capitalize on adverse headlines.
The U.S. Securities and Exchange Commission (SEC) has said it had not “reached any conclusions with respect to any of the issues involved,” with the Bitcoin exchange-traded fund (ETF) proposal backed by investment firm VanEck and financial services company SolidX.
The Commission has requested further comments on the matter. This keeps the hope alive that an ETF might become a reality sooner than most expect.
When an asset class doesn’t fall on adverse news but rises on minor positives, it indicates that the investors are looking for reasons to buy. So, which are the cryptocurrencies that are showing a bottom formation? Let’s find out.
Bitcoin has broken out of both moving averages. It should now move up to the downtrend line of the descending triangle, which will act as a stiff resistance. The cryptocurrency has turned down four times from this line, making a lower high on each occasion.
This sequence will be broken if the bulls can push price above the previous lower high of $7413.46. Such a move will invalidate the descending triangle, which is a bullish sign. The positive divergence on the RSI is another indication of accumulation at the support.
The zone of $5,900–$6,075.04 has held five times since February of this year, making it a formidable support. The traders can wait for today’s close (UTC) to be above $6,600 and buy 50 percent of the desired allocation in the range of $6,600–$6,750.
We don’t want to buy the complete allocation at the current level because the downtrend line of the descending triangle can invite selling by the bears. However, as the prices have bounced off the lows, we want to initiate partial position because the stops are close by. The initial SL can be kept at $5,900.
If the BTC/USD pair struggles to break out of the downtrend line of the triangle, the traders can trail the stops higher. We shall add the remaining 50 percent of the position when the price sustains above the downtrend line. The targets are $7413.46 and $8566.4. Our bullish view will be invalidated if the bears break the critical support zone.
Ethereum has not participated in the pullback. It continues to languish below the 50-day SMA and inside the descending channel.
The 20-day EMA has flattened out and the RSI is also trying to move up into the positive territory, which shows that the selling pressure has abated.
If the bulls can break out of the downtrend line of the descending channel and the 50-day SMA, a change in trend is likely. We suggest traders wait for the breakout before initiating any long positions.
If the ETH/USD pair fails to sustain above the 50-day SMA, it might remain range bound and enter a bottoming formation.
Ripple has rallied over 184 percent in just four days. With this move, it has broken out of the downtrend line with force. The downtrend is over and a new trend has started.
The moving averages have completed a bullish crossover and the RSI has risen into the overbought territory for the first time since April of this year. While all these are positive signs, we shall not attempt to chase the rally higher.
The traders should wait for the rally to stall for a day or two and then build new positions because if a long position is initiated at the current levels, the stop loss will have to be way lower. Therefore, although we are bullish on the XRP/USD pair, we shall not suggest any long positions at the current levels.
The important level to watch out on the upside is $0.70, which is acting as a stiff resistance. On any correction, the downtrend line, which had been acting as a resistance until now, will act as a strong support.
Bitcoin Cash has also pulled back along with the other cryptocurrencies. It has broken out of the 20-day EMA and can now move up to the 50-day SMA, which is just below the resistance line of the descending channel.
A break out of the descending channel will…