Bitcoin Flashes Wyckoff ‘Sign of Strength’ Hinting at New Bull Market

Bitcoin (BTC) may have just signaled its return to a bull market, according to fresh analysis using a century-old price prediction method.

In a tweet on Jan. 7, ex-Goldman Sachs analyst Murad Mahmudov channeled the work of Richard Wyckoff to suggest Bitcoin was in the process of a major recovery. 

BTC puts in Wyckoff “SOS”

BTC/USD cracked resistance at $7,600 on Monday, surprising punters who considered the levels too difficult to pass under current conditions. At press time, the pair traded at $7,875, having reached $7,980 and gaining 5% on the day.

Wyckoff was the father of a whole new method of analyzing price performance, dubbed the Wyckoff Method. According to Mahmudov, who uploaded a chart to demonstrate Bitcoin’s position, the largest cryptocurrency has already put in a bottom.

Tuesday’s spike to near $8,000, for example, was an “SOS” point for BTC/USD in Wyckoff terms. SOS stands for “sign of strength,” and typically follows a so-called “spring” event which sees a price low point. 

After the SOS, a slight retracement called a “back-up” should precede further gains, according to the model. 

Bitcoin price as analyzed using the Wyckoff Method

Bitcoin price as analyzed using the Wyckoff Method. Source: Murad Mahmudov/ Twitter

Accumulation phase ending?

Mahmudov did not comment on the extent to which he personally believed in the validity of the bull scenario, which would reverse a general downtrend for Bitcoin that began in June after reaching nearly $14,000. 

Following a late October bounce to $9,500, BTC/USD appeared to bottom out at $6,400 in mid-December, but not everyone is convinced that the floor has come and gone

In the run-up to Bitcoin’s block reward halving in May, another historically accurate price model, Stock-to-Flow, calls for a price of around $8,300.

Mahmudov is well known for his highly optimistic views on where the Bitcoin price is heading. In August, he said accumulation — also the overarching term for Bitcoin’s current Wyckoff phase — was already happening.

“Don’t try to outsmart yourself on short timeframes, zoom out & think big. In my view, BTC is going to $100K per orangecoin,” he summarized at the time.

Bitcoin Price Rockets to $8,450 as Iran Attacks U.S. Bases in Iraq

On Tuesday Bitcoin price continued the rally of the previous day by retaking $8,000 then pushing above the 200-day moving average for the first time since November 2019. The strong upside move also brought the digital asset above the long-term descending channel which formed on Jun. 25 and outside of today’s channel breach, Bitcoin had been pinned beneath the trendline since Oct. 26 when Chinese President Xi Jinping called for China to fast track the development and integration of blockchain technology.  

Cryptocurrency market weekly overview

Cryptocurrency market weekly overview. Source: Coin360

Many believe Bitcoin’s strong surge from $7,000 to nearly $8,500 has been heavily influenced by the rising tensions between the United States and Iran. In fact, the most recent push above $8,500 occurred as mainstream media reported that Iran had attacked United States troops stationed at two military bases in Iraq. 

More than a dozen missiles were fired at both bases and at the time of writing no casualties have been reported. Gold and oil prices also increased sharply, with spot gold price topping a 6-year high at $1,603.21 and gold futures rising 2% to $1,605.80. 

BTC, Gold, Oil and S&P 500 chart

BTC, Gold, Oil and S&P 500 chart. Source: YCharts

Crude oil price also surged 4% with West Texas Intermediate crude futures rallying to $65.65 and Brent crude rising to $71.75 per barrel. As commodities like gold, silver, and oil rallied, the Dow Jones Industrial Average futures dropped by 343 points and the S&P500 and Nasdaq futures also pulled back slightly. 

This shows that traders expect that the escalation between the two countries will negatively impact Wednesday’s open in traditional markets.

BTC USD daily chart

BTC USD daily chart. Source: TradingView

Bitcoin’s rally alongside assets like oil, gold, and silver is not a surprise to most traders as many believe the digital asset is correlated to the price action of commodities. Since Jan. 6, Bitcoin price has rallied 15% and traders will be closely watching to see if the asset to see if it can hold its recent gains above the 200-DMA and the descending channel. 

BTC USD 6-hour chart

BTC USD 6-hour chart. Source: TradingView

On the shorter timeframes, the rally is beginning to look a bit over-extended with the 6-hour relative strength index (RSI) punching above overbought territory at 84 and the same could be said for the Stochastic RSI. 

One positive is the strong move to $8,470 allowed the price to punch through the $8,100 – $8,300 high volume node of the volume profile visible range (VPVR), so as the price pulls back an encouraging development would be to see $8,300 flip from resistance to a support level. 

If the bulls fail to hold $8,300, the price could pullback to $8,150 which is right along the main arm of the descending channel and near the 78.6% Fibonacci retracement level. 

Bitcoin weekly price chart

Bitcoin weekly price chart. Source: Coin360

The overall cryptocurrency market cap now stands at $217.7 billion and Bitcoin’s dominance rate has risen to 69.1%. Notable gainers amongst altcoins were Litecoin (LTC) with a 4.73% gain and Chainlink (LINK) with 10.04%.

Keep track of top crypto markets in real time here

Bitcoin Price Rallies 5.5% to $8K – Is $8.2K the Next Stop?

On Monday during the U.S. evening trading session, Bitcoin (BTC) price continued its rally from $7,358 and at the time of writing the price pushed as high as $8,000. For the past week, traders have been closely watching to see if Bitcoin could flip $7,450 from a resistance to support and many suggested that sustained move above $7,600 would open the door for a shot at the $8,000 to $8,200 range. 

The 4-hour close above $7,600 pulled the price above the 50-day moving average (MA) and provided bulls with enough confidence to push the Bitcoin to set a daily higher high not seen since Nov. 21 when the asset traded for $8,122.

Cryptocurrency market daily overview. Source: Coin360

Currently, Bitcoin price is closing in on the 200-day moving average (MA) and this point is also within $40 of the main trendline of the long-term descending channel which formed when Bitcoin topped out at $13,800 on Jun. 26. 

Traders will be keeping a close eye on this zone as the price has experienced multiple rejections at the trendline. The volume profile visible range (VPVR) also shows a high volume node right at the descending trendline ($8,168), meaning traders could anticipate so push back at this level and book profits. 

BTC USD Daily Relative Strength Index (RSI) chart. Source: TradingView

In the daily time frame, the relative (RSI) has reached 64.5 which is bullish territory but also close to the level where the indicator pulled back on Oct. 25, Aug. 8, Aug. 5 and July. 9. 

BTC USD Perpetual Inverse Swap Contract daily chart. Source: TradingView

Earlier in the day crypto analyst Philip Swift tweeted the above daily chart and suggested that Bitcoin was reapproaching what he describes as the crucial 2-year moving average: 

“Still a lot of the day to go for $BTC but on the 10th (!) attempt I think we are finally going to get the close above the 2yr MA. 

Pump it! “

Bitcoin 1-day price chart. Source: Coin360

Traders will now watch to see if the digital asset can hold above $8,000 or a healthy pullback to $7,750 could be on the cards. 

The overall cryptocurrency market cap was $211.4 billion and Bitcoin’s dominance rate has risen to 68%. A number of the altcoins have also followed Bitcoin’s price action to post 3% to 5% gains and the most notable altcoin of the day is XRP with a 12.13% gain.

Keep track of top crypto markets in real time here

Google Trends Sees ‘Bitcoin Iran’ Surge 4,500% on Safe Haven Narrative

Bitcoin (BTC) benefiting from the Iran crisis has captured the imagination of internet users worldwide, with its Google search popularity up almost 5,000%.

According to data from Google Trends, the search term “Bitcoin Iran” surged 4,450% in the seven days to Jan. 8. 

Bitcoin search popularity follows price

The term “Bitcoin” itself also saw a significant uptick around the globe, reaching a normalized score of 100 on Wednesday versus 40 a week ago.

Nigeria topped the list for both terms’ most frequent country of origin. Canada, Singapore and the United States also generated significant interest for “Bitcoin Iran.”

7-day search data for “Bitcoin Iran.”

7-day search data for “Bitcoin Iran.” Source: Google Trends

The figures come as Bitcoin continues to make significant price advances, with weekly gains currently topping 15%. Commentators immediately began attributing the performance to events in Iran, arguing geopolitical instability tends to produce price rises.

“Selling the narrative”

Others were less convinced, claiming the connection was, in fact, a fictional narrative that could nonetheless become a self-fulfilling prophecy as it went mainstream.

Su Zhu, CEO at Three Arrows Capital, highlighted an article in Nikkei Asian Review as proof non-crypto sources were buying into the idea. 

The publication claimed Iran was “triggering a surge in cryptocurrencies.” A tweet read:

“Free from state interference or geopolitical risk, #cryptocurrencies become ‘digital gold’ amid rising #Iran tensions.”

The article conversely quoted an exchange source who poured cold water on the idea.

“For Bitcoin, though, investors feel they can safely put a portion of their funds into it and hold it for the longer term without having to worry about any reversion to a mean, as it is not inherently linked to U.S.-Iran tensions,” Sheel Kohli, chief marketing officer at AAX said.

As Cointelegraph reported, search activity around Bitcoin began gaining momentum late last year. In December, it was another topic, “Bitcoin halving,” which began turning heads.

Last week, reports emerged of Bitcoin trading at a giant premium in Iran, with a single coin worth $24,000 according to the so-called “official” rial exchange rate. In reality, as sources noted, such a rate is all but fictional given its value compared to the ubiquitous black market.

New Data Suggests Bitcoin and Gold Aren’t as Correlated as You Think

Bitcoin’s (BTC) classification has been a controversial and difficult topic for crypto-enthusiasts, investors, and regulators to reach a consensus on. The digital asset has been compared to a currency, a commodity, an investment asset or even said to have no underlying value. However, from the perspective of regulators, Bitcoin has been mostly associated and studied as a commodity, especially in relation to gold. In fact, many times Bitcoin is referred to as the “new gold” or “digital gold.”

This week, as tensions between the United States and Iran ramped up, gold reached a 6-year high while BTC price rose about 20%. Thus, analysts are attempting to re-evaluate to what extent commodities and other traditional assets are linked to Bitcoin’s long and short-term price action.

How correlated are gold and Bitcoin prices?

Looking at the price action of Bitcoin and gold from April 2013 until now, one can see that gold reached its peak in 2020, while Bitcoin reached its maximum price in late 2017. But how are they related?

When computing the correlations for the entire sample (from April 2013 until December 2019), between gold and Bitcoin prices, the data showed that they are considerably correlated at 46.5%, with 0% being not correlated, 100% meaning it’s fully positively correlated and -100% meaning it’s fully inversely correlated.

Interestingly, when comparing the correlation of prices between 2018 and 2019, we can confirm that the correlation of prices increases from 60.3% in 2018 to 70.8% in 2019.

This raises the scenario that as crypto markets mature, the price action begins to resemble that of traditional assets. The correlations between lagged gold prices and Bitcoin prices also show similarities.

Figure 1: Gold prices from April 2013 until Christmas 2019

Figure 1: Gold prices from April 2013 until Christmas 2019

What should investors expect next?

Over the last week, the gold price surged to a record high at $1,606 per ounce and gold futures prices and volatility has also increased. At the same time, Bitcoin’s rallied above $8,300, which represents its highest price since November 2019.

Figure 2: Bitcoin’s Price in the last 7 days. Data source: Coinmarketcap

Figure 2: Bitcoin’s Price in the last 7 days. Data source: Coinmarketcap

Moreover, on Jan. 8, Bitcoin reached its highest daily transaction volume (over $28 billion), since the price dump that occurred on Dec. 18. Looking at Bitcoin’s volatility premium provided by Coinmarketcap, one can also see the highest values on Jan. 8 and on Jan. 3 since Dec. 18.

Figure 3: Bitcoin’s Daily Volume in the last 7 days. Data source: Coinmarketcap

Figure 3: Bitcoin’s Daily Volume in the last 7 days. Data source: Coinmarketcap

Figure 4: Bitcoin’s Volatility Premium in the last 7 days. Data source: Coinmarketcap

Figure 4: Bitcoin’s Volatility Premium in the last 7 days. Data source: Coinmarketcap

Looking exclusively at price correlations, investors might be tempted to conclude that a relationship between gold and Bitcoin exists. However, the data is not sufficient enough to reach that conclusion.

What about gold and Bitcoin returns?

The correlation between returns is much weaker than between both asset’s prices with only a 2.2% relationship for the full sample studied. However, one can see an increase in BTC and gold price correlation from 2018 (8.7%) to 2019 (12.5%).

The same improvement between 2018 and 2019 is seen when looking at lagged returns. But in that case, the correlation in 2018 is negative (-4.7%), as well as the results for the full sample (-2.3%), but positive in 2019 (2.3%), which may lead analysts to reject the proposition that gold returns are linked to Bitcoin’s behavior.

Does correlation lead to a disappointing conclusion?

Let’s look to see if gold returns explain the way Bitcoin’s returns move by doing a regression model. When analyzing this sample of returns, the coefficients show that when gold increases by 1%, Bitcoin increased by 0.115%.

However, these results are not statistically significant, which would lead some analysts to say one is unable to confirm that small positive relationship. A negative relationship, even though not statistically significant, is found when regressing Bitcoin returns against the lag of gold returns, which, once again can lead us to assume that gold price action doesn’t predict Bitcoin.

But what about oil, the biggest commodity in the world

Bitcoin has been compared to commodities at large but some of its underlying assumptions — fixed supply and high volatility — cause challenges to that classification when compared to oil.

Amid the recent conflict between the U.S. and Iran, WTI oil prices rose 2.86% between Jan. 2 and Jan. 7, while Brent Oil prices rose 3.9%. Oil futures prices also behaved similarly.

Taking a bird’s eye view of this scenario and using the sample time period as with gold, the data shows a negative relationship (-13.5%) between oil (WTI) and Bitcoin price. Contrary to the previous findings, the correlations’ evolution from 2018 to 2019 is negative — 22% in 2018 and -3.7% in 2019.

Regarding returns, the same negative correlation is seen for the full sample (-2.5%) and during 2019 (-3%). Once again, the correlations in 2018 are better than in other periods (1.8%), even though they are of a very small magnitude.

Looking at the lagged WTI returns, one can also observe negative correlations in 2018 and 2019 but small positive correlations for the full sample (3%), which is better than what we’ve seen in gold returns.

Figure 5: WTI Oil Prices from April 2013 until Dec. 25, 2019

Figure 5: WTI Oil Prices from April 2013 until Dec. 25, 2019

Following a regression model with WTI oil returns, once again one cannot find significant results to confirm that oil could be a predictor of Bitcoin returns.

In the case of oil, coefficients for both normal returns and lagged returns are negative, while in gold’s normal returns the coefficient was positive, suggesting a completely opposite relationship between oil and Bitcoin.

Figure 6: Cumulative return of investing in gold, oil and bitcoin in April 2013 sample until Christmas 2019

Figure 6: Cumulative return of investing in gold, oil and bitcoin in April 2013 sample until Christmas 2019

Bitcoin: is it a commodity or something else?

Bitcoin’s classification remains an open question. In the short-term, and during a week with high geopolitical instability, Bitcoin and commodities such as gold and oil have performed in a similar fashion. Whereas traditional stock indexes as the S&P 500 and DJIA went in the opposite direction.

On wider time frames, the data suggests that there isn’t much correlation between Bitcoin and gold and even less when compared to oil. This raises additional questions when comparing Bitcoin to a traditional commodity.

Over the long-term, considering the sample used in Figure 6, BTC still offers a better investment option for investors when compared to investing in gold or oil. As Cointelegraph reported in December, Bitcoin price action dwarfed all other investments in the past decade with nearly 9 million percent gains.

Nevertheless, the factors that influence Bitcoin’s price and returns are not conclusive. At the same time, Bitcoin may be increasingly seen by traders as a non-correlated asset to traditional stock indexes in periods of economic uncertainty, acting more like a safe haven as this past week has shown. As Cointelegraph reported earlier, even the mainstream media is buying into the idea of Bitcoin as a politically-neutral asset.

“Free from state interference or geopolitical risk, cryptocurrencies become ‘digital gold’ amid rising Iran tensions,” publication Nikkei Asian Review noted amid the U.S.-Iran tensions this past week.

If Bitcoin is adopted by individuals and corporations, this inverse relation with traditional markets and commodities could become even more pronounced in the future. Whether that evolution will lead Bitcoin closer to a commodity, currency, solely a speculative asset — or an entirely new asset class — remains to be seen.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Price Analysis Jan 06: BTC, ETH, XRP, BCH, LTC, EOS, BNB, BSV, XLM, XMR

The price of an asset class is determined by its fundamentals and the sentiment towards it. At times of panic or exuberance, fundamentals take a back seat and sentiment dictates the price action. Currently, the US-Iran tension has sent investors scurrying towards safety. This has seen a move away from stocks and into assets that are considered safe havens.

However, it is unlikely to be a one-way move. There will be periods of calm that would be followed by statements from both parties that would reignite the conflict. Accordingly, the volatility will remain high as the market participants interpret and digest the news and events.

If the tension cools down, the price might give up some of its recent gains as the bulls and the bears again battle it out for supremacy. At this juncture, the fundamentals of the asset class will play a major role in setting the next course of direction.

Daily cryptocurrency market performance. Source: Coin360

Daily cryptocurrency market performance. Source: Coin360

For the next few days, the short-term traders might get several opportunities to ride the small rallies. We believe that traders should book profits intermittently instead of waiting for a large windfall profit. Let’s study the charts of the top cryptocurrencies and determine the best possible course of action.

BTC/USD

Bitcoin (BTC) has risen above both moving averages, which are on the verge of a bullish crossover. The RSI has also risen into the positive zone, which suggests that bulls have a slight advantage. The price can now move up to the overhead resistance at $7,856.76.

BTC USD daily chart. Source: Tradingview

BTC USD daily chart. Source: Tradingview

If the bulls can carry the price above $7,856.76, the momentum is likely to pick up and a rally to $10,360.89 is possible. As the risk to reward ratio is attractive, we suggest traders initiate long positions as suggested in our earlier analysis.

However, if the bears defend $7,856.76, the BTC/USD pair might remain range-bound for a few more days. A break below $7,000 will be the first sign that bears are back in action. The downtrend will resume below $6,435.

ETH/USD

Ether (ETH) broke and closed (UTC time) above the resistance line of the symmetrical triangle on Jan. 5, which triggered our buy suggested in an earlier analysis. The price has reached the 50-day SMA, which might act as a minor resistance.

ETH USD daily chart. Source: Tradingview

ETH USD daily chart. Source: Tradingview

If the bulls push the price above the 50-day SMA, the ETH/USD pair is likely to rally to the $151.829 to $157.50 resistance zone. We anticipate the bears to mount a strong defense of this zone, hence, traders can book partial profits close to the zone. For now, the traders can keep the stop loss on the long position at $122.

Our bullish view will be invalidated if the price turns down from the current levels and plummets below $125.841. Such a move will increase the possibility of a retest of the recent lows at $117.090.

XRP/USD

XRP has surged above the overhead resistance at $0.20041 and is attempting to scale above the 50-day SMA. The strength of the breakout from the tight $0.18339 to $0.20041 range suggests that the bulls have overpowered the bears.

XRP USD daily chart. Source: Tradingview

XRP USD daily chart. Source: Tradingview

There is a minor resistance at the 50-day SMA, above which a rally to $0.2326 is possible. The flattening 20-day EMA and the RSI in positive territory suggest that the bears are losing their grip.

However, as the price has risen sharply, we suggest traders wait for a dip towards the breakout level of $0.20041 or a minor consolidation to happen before initiating long positions. Hence, we withdraw the buy proposed in an earlier analysis.

Contrary to our assumption, if the bulls fail to sustain the price above $0.20041, the bears will once again attempt to sink the price below $0.18339.

BCH/USD

After a minor consolidation for the past two days, Bitcoin Cash (BCH) has broken out of the overhead resistance at $227.01, which is a positive sign. The price is nearing the next resistance at $241.85. The traders can book partial profits at the current levels and trail the stops higher on the remaining long position to $215.

BCH USD daily chart. Source: Tradingview

BCH USD daily chart. Source: Tradingview

If the bulls can push the price above $241.85, the next target is a move to $306.78. The moving averages are on the verge of a bullish crossover and the RSI is in the positive territory, which suggests that the bulls are in command.

Our bullish view will be invalidated if the BCH/USD pair turns down from the current levels and break below the moving averages.

LTC/USD

Litecoin (LTC) is attempting to break out of the 50-day SMA. If successful, it can move up to the overhead resistance at $50. The moving averages are on the verge of a bullish crossover and the RSI is in the positive zone, which suggests that bulls have the upper hand.

LTC USD daily chart. Source: Tradingview

LTC USD daily chart. Source: Tradingview

If the bulls can scale the price above $50, a move to $60 is possible. However, if the price turns down from $50, the LTC/USD pair might remain range-bound for a few more days.

The traders can watch the price action close to $50 and book profits if the bulls struggle to break above it. However, if the price breaks out of $50, the traders can trail the stops higher to protect the paper profits. For now, the traders can maintain the stops on the long position at $38.

EOS/USD

EOS has risen close to the overhead resistance at $2.8695. The moving averages are about to complete a bullish crossover and the RSI is in the positive zone, which is a positive sign. This shows that bulls are in command.

EOS USD daily chart. Source: Tradingview

EOS USD daily chart. Source: Tradingview

If the bulls can push the price above $2.8695, a rally to the downtrend line is likely. We anticipate the bears to defend the downtrend line aggressively, as the price has repeatedly turned down from it in the past few months. Therefore, traders can keep a close watch and book partial profits close to the downtrend line.

However, if the EOS/USD pair scales above the downtrend line, a move to $3.50 is possible. For now, the traders can keep the stop loss on the long positions at $2.40, which can be trailed higher after the pair rises above $2.8695.

BNB/USD

Binance Coin (BNB) has broken out of the overhead resistance at $14.5201 and held it for four hours. This has triggered our buy recommendation given in an earlier analysis. There is a minor resistance at the 50-day SMA, above which a rally to $16.50 is possible. The stop loss on the long position can be kept at $12.95.

BNB USD daily chart. Source: Tradingview

BNB USD daily chart. Source: Tradingview

Contrary to our assumption, if the price turns down from the 50-day SMA and plummets back below $14.5201, it will be a negative sign. It will signal a lack of buyers at higher levels. The BNB/USD pair might thereafter remain range-bound for a few days. The downtrend will resume if the bears sink the price below the support at $12.1111.

BSV/USD

The bulls have propelled Bitcoin SV (BSV) above the overhead resistance at $113.96. This is a positive sign as it shows that the momentum favors the bulls. The moving averages have completed a bullish crossover and the RSI has risen close to the overbought levels, which suggests that the advantage is with the bulls.

BSV USD daily chart. Source: Tradingview

BSV USD daily chart. Source: Tradingview

If the price sustains above $113.96, a move to $140 is possible. Therefore, the traders can trail their stop loss on the long positions to $102.

Our bullish view will be invalidated if the price turns down from the current levels and sustains below $113.96.

XLM/USD

Stellar Lumens (XLM) has broken out of the first overhead resistance at $0.047799. If the price closes (UTC time) above this level, it will trigger our buy recommended in the previous analysis.

XLM USD daily chart. Source: Tradingview

XLM USD daily chart. Source: Tradingview

The 20-day EMA has flattened out and the RSI has risen into the positive territory. This suggests that the bears are losing their grip.

If the price continues its move northwards and breaks above $0.051014, a rally to $0.06 and above it to $0.088 is likely. Conversely, if the price fails to sustain above $0.047799, the XLM/USD pair might remain range-bound for a few more days. The pair will turn negative on a break below $0.042133.

XMR/USD

Monero (XMR) has made it to the list of top ten cryptocurrencies by market capitalization. This shows that the altcoin is finding favor from the bulls. The price broke out of a long-term descending channel on Jan. 03, which suggests that the downtrend might be over.

XMR USD daily chart. Source: Tradingview

XMR USD daily chart. Source: Tradingview

However, the end of a downtrend does not automatically signal the start of an uptrend because, at times, the price consolidates in a range before starting a new uptrend.

Currently, the price has risen sharply from the lows of $44.50 and has reached the overhead resistance at $57.1199. A breakout of this level can propel the XMR/USD pair to $67. However, if the bears defend the resistance at $57.1199, the pair might remain range-bound for a few more days.

Though we are positive, we do not find a trade with a good risk to reward ratio, hence, we are not proposing a long position in it.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

4 Signs the Cryptocurrency Altcoin Market May Have Finally Bottomed

Bitcoin (BTC) made a sudden jump of 9% in the past 24 hours. However, altcoin cryptocurrencies have been showing strength recently as well.

Recent surges from large caps have been in the double digits with Dash (DASH) surging 50% and Bitcoin Cash (BCH) 30% in the past four days. Is it possible to draw a conclusion that the altcoin market capitalization is potentially bottoming? Let’s find out.

Crypto market daily performance. Source: Coin360

Crypto market daily performance. Source: Coin360

Altcoins retraced to their cycle lows

Many altcoins have reached their cycle low levels, which means that many of them hit levels not seen since before the bull market in 2017, and some have even dropped to their January 2016 levels. One example is Dash.

Dash BTC 5-day chart. Source: TradingView

Dash BTC 5-day chart. Source: TradingView

Markets tend to move in cycles, through which data accumulates from previous periods. The Dash chart is showing a cycle low in 2016 at the green rectangle.

A similar level and bounce are spotted from this price through the past weeks, combined with bullish divergence. This bullish divergence was also spotted on smaller time frames in January 2016.

XMR BTC 5-day chart. Source: TradingView

XMR BTC 5-day chart. Source: TradingView

At the same time, a full retrace to these levels is not always necessary. It can also retrace towards the cycle lows in 2017. An example of such a chart is Monero (XMR). This privacy-focused coin retraced back to the first support of the last cycle, found around 0.00600000 satoshis.

The same phenomenon is spotted here, which means that there’s another bullish divergence marking a local bottom.

So is a new cycle is going to start? If we would do a survey of sentiment between regular altcoin investors, then it would currently be “depression,” as the majority of the altcoins have been crushed in the last months against their BTC pair.

Moreover, a similar view is found on USD pairs with XRP (XRP), in particular, demonstrating major weakness in recent months.

XRP USD 5-day chart. Source: TradingView

XRP USD 5-day chart. Source: TradingView

XRP lost major support at $0.30 and retraced towards the next major support, seemingly the last “crucial” one. The same views were found in the previous cycle, through which similar support was tested before continuation and a bull market started. That period was in January 2016 when the breakdown occurred, and now it’s January 2020.

Bitcoin in the process of finding a cycle low

Remarkably, the best period for altcoins is when Bitcoin makes a slow, upwards grind. People tend to have Bitcoin as their safe haven and trade altcoins a bit more. However, when Bitcoin starts to turn parabolic (like we saw in June 2019), altcoins are being sold for Bitcoin. And when Bitcoin decides to move downwards, people and traders sell their cryptocurrencies for USD.

Hence, Bitcoin has to now find a cycle low for altcoins to gain some upward momentum.

BTC USD 5-day chart. Source: TradingView

BTC USD 5-day chart. Source: TradingView

Given this chart, the price of Bitcoin hit a 4-year old trendline and bounced from it. Aside from that, the golden pocket Fibonacci ratio held as well, which is showing signals of a possible bottom formation.

Similar, in January 2016, a bottom formation was found as well, which gave altcoins freedom to grow, as the price of Bitcoin was making slow movements to the upside.

A similar thought and expectation could be the case here, in which Bitcoin is slowly grinding upwards in the coming months, giving altcoins space to continue.

Long-term downtrends break to the upside

Another significant sign is the stoppage of downtrends. Some large caps have broken out of their 2-year old downtrends while some of them still have to break upwards. One example is Bitcoin Cash.

BCH BTC 5-day chart. Source: TradingView 

BCH BTC 5-day chart. Source: TradingView 

This chart shows that the price broke a 2-year old downtrend, which could signal the start of an uptrend from here. A similar breakout is seen in the Ethereum Classic (ETC) chart, though, admittedly, Ether (ETH) is not quite there yet.

ETH BTC 4-day chart. Source: TradingView

ETH BTC 4-day chart. Source: TradingView

Nevertheless, Ether is close to breaking it. If we analyze this chart, it shows that ETH fully retraced to the 2016 lows as well. Additionally, the low in September 2019 at 0.01645000 satoshis marked a bullish divergence.

This pattern also marked the beginning of previous bullish reversals. For example, as of January 2016, a slightly higher low led to a breakout of the downtrend, comparable with the movements of January 2017 and January 2018.

Thus, another 2-year old downtrend is on the table here, ready to be broken to the upside. If that occurs, a significant move should occur for altcoins if the biggest altcoin finally breaks out of its downtrend.

Indeed, the first quarter of the year once again looks like a good period for trading altcoins. In fact, Ether has been reversing these downtrends almost always in Q1.

Total market cap eyes potential breakout after a retest

Total altcoin market capitalization chart. Source: TradingView

Total altcoin market capitalization chart. Source: TradingView

A significant sign is a bounce in the green zone from the total altcoin market capitalization. This level was the support zone in 2017 before the big bull market. The level also served as support in April 2019 before the significant surge of altcoins occurred (and ETH rallied towards $360).

However, the total altcoin capitalization needs to show strength and break the downtrend. If that occurs, total altcoin capitalization could then see $80 and $125 billion as the next levels.

Total altcoin market capitalization chart of 2015. Source: TradingView

Total altcoin market capitalization chart of 2015. Source: TradingView

A similar retest occurred from November 2015 to January 2016, the last cycle’s low. A retest was necessary to confirm support before the altcoins started to make their moves.

Therefore, there are more arguments for potential long entries and possible bottom formations on altcoins rather than further downwards pressure. However, the crypto market is highly unpredictable, so tread carefully. If Bitcoin decides to make a move towards $9,500, altcoins may likely be crushed further against their BTC pairs. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

‘Pro-Bitcoin’ Telegram Group Enters Read-Only Mode, Group Contributor Says Reason Unclear

On Jan. 3 a “pro-Bitcoin” news outlet called “Nakamoto” launched with the stated intention of letting industry thought leaders share positive content about cryptocurrencies.

According to the about section of the Nakamoto website, the platform was launched “to create a venue for quality technical, philosophical, and cultural writing that is of general interest to the crypto community as a whole, for beginners and experts alike.”

The news site also mentions that “all Nakamoto contributors share one non-negotiable value: they must be pro-Bitcoin (BTC) for the long-term.”

While this may be the case, many Nakamoto contributors are leading communities rivaling Bitcoin. For example, Michael Arrington, co-founder of Arrington XRP Capital, is a writer on the platform. On Jan. 3 Arrington published his first piece on Nakamoto entitled, “It Will Take Years For Smart People To Understand Cryptocurrencies.”

Bitcoin Cash proponent, Roger Ver, is another contributor to the site, along with Ethereum co-founder, Vitalik Buterin. The contributor list has created controversy in the crypto space, as the group makes it clear that all writers must be pro-Bitcoin, yet many of them are leading other initiatives.  

The Nakamoto Telegram Channel Controversy 

In addition to a contributor network that seems to go against the news sites’ values, Nakamoto’s Telegram account, which was created for the crypto community to share their thoughts regarding the platform’s content, has gone into “read-only mode.”

According to a pinned message in the Nakamoto Telegram Channel, read-only mode occurred as a result of “trolls and spambots” and that Telegram’s moderation tools are “only so-so and have many false positives.”

Source: Telegram

Ironically, Nakamoto’s Telegram group, which currently has over 2,240 members, is moderated by Vitalik Buterin, Zooko Wilcox of the Electric Coin Company and Hudson Jameson, who is the community manager at the Ethereum Foundation. Each of these members supports non-Bitcoin related projects — which wouldn’t necessarily be a problem, but has led to some suspicion that they will use that forum as a platform for non-BTC coins.

A Cointelegraph reporter introduced himself to the group on Jan. 5 simply by saying: “Hi I’m pro BTC”. Seconds later, he got a message saying the group is no longer accessible.

Source: Telegram

Is read-only mode a result of trolls and spambots?

While the Nakamoto Telegram channel claims in its pinned message that read-only mode is a reaction to trolls and spambots, the controversy surrounding the new site’s’ Telegram group has the crypto community speculating. 

Nakamoto website contributor Michael Arrington told Cointelegraph on Twitter that read-only mode is due to the group’s fast growth. He explained:

“I believe @balajis said that it grew so fast that the trolls had taken up residence, so they put it on read only until they find a better solution.”

@balajis is the Twitter handle for former Coinbase CTO, Balaji Srinivasan, who apparently is the owner of the Telegram group chat. 

Arrington replied to Cointelegraph seconds later that he actually can’t discuss the real reason why read only mode is on the telegram channel:

Source: Twitter

In the meantime, the pinned message in the Nakamoto Telegram channel notes for users to follow the group on twitter — the account has almost 8,000 followers.

Bitcoin Price: First 4-Day Win Streak Since July Flips Charts Bullish

Bitcoin (BTC) closed the week down 0.39% at $7,356 having recovered very quickly from a daily close, which saw BTC trading down at $6,850 for a short period on Friday morning. Since then, Bitcoin has recovered over 10% and is once again pushing hard against resistance on Monday. 

All other cryptos are up over the last 24 hours, most outperforming Bitcoin, with XRP being up close to 9% while just about all other top cryptos posting gains of around 5%. 

This is a trend change. With Bitcoin recently leading the market, it could be a sign of renewed interest from the cryptocurrency bulls. As a result, Bitcoin dominance has fallen very slightly below 68%.

Cryptocurrency market 24-hour view

Cryptocurrency market 24-hour view. Source: Coin360

BTC price: 1-week chart

The one week chart shows that the price of Bitcoin continues to press hard against the resistance of $7,555, which has failed to be broken on a weekly basis since it was lost mid-November. 

Continued rejections in the $6,000s and a recent pattern of overall higher lows demonstrate that upward pressure is building at this moment.

BTC USD Weekly chart

BTC USD Weekly chart. Source: TradingView

Meanwhile, volume continues to decrease on spot exchanges and in an overall decline, but there are notable large green candles when price lows have been tested, which hints at accumulation.

The moving average convergence divergence indicator, or MACD, continues to build a bullish divergence on its histogram, which is into its sixth week of higher lows while price has been stagnant. But we are likely to remain a few weeks away from a bullish cross unless there is a breakout.

The RSI has clearly stopped breaking to the downside and looks to be drifting bullish above 50.

BTC USD Weekly chart

BTC USD Weekly chart. Source: TradingView

1-day chart

The daily chart for Bitcoin clearly demonstrates the bullish picture on Monday morning with a large green candle pushing hard up against resistance that has emerged following a failure to break $7,555 previously, which resulted in a selloff that we discussed as a likely outcome last week.

A large-bodied daily candle will be what the bulls are looking for. There has been continued short interest at this level for weeks and we should expect the same until the rule is broken, and the response from the United States in the first couple of hours trading will be very telling today.

BTC USD 1-day Chart

BTC USD 1-day Chart. Source: TradingView

The point of control has been acting as a good area of support for the bulls around $7,200 with it only briefly being lost on three occasions. The daily candles show four back to back green candles, which has not occurred since July, and the most notable volume bars appear to be won by the bulls, which is a positive sign.

The MACD has also been trending to the upside for weeks with a bullish cross with its signal line and has now crossed its zero line, meaning the underlying 12 and 26 EMAs as now crossed bullish.

The RSI is also breaking out to the upside and trending above 50. Each of these indicators demonstrates multi-week bullish momentum, which is now technically being confirmed (pending a move in price).

BTC USD 1 Day Chart

BTC USD 1 Day Chart. Source: TradingView

 4-hour chart

The 4-hour chart clearly shows a case for the bottoming pattern for an inverse head and shoulders, which is supported by declining volume as one would expect to see with this pattern. 

Each of the key moving averages is also all crossed bullish. In addition, the 4-hour chart is trying to build upon the close above declining resistance. Combined with the daily close currently being up against horizontal resistance, this is clearly a pivotal moment.   

BTC USD 4-hour chart

BTC USD 4-hour chart. Source: TradingView

The 4-hour chart does show some signs of weakness with declining volume, declining MACD pressure and again the same on the RSI while the price has been appreciating.

This is unsurprising due to the overhead resistance and the outcome is likely to be determined as U.S. traders wake up.   

BTC USD 4-hour chart

BTC USD 4-hour chart. Source: TradingView

Should Bitcoin breakdown, the most likely port of call will be $7,000-7200 where the point of control lies since it has been acting as resistance and support for weeks. 

It is also the 61.8% retracement of the move from last week’s lows. So if Bitcoin is rejected, this could be an area of buying interest. A failure to hold the point of control again could mean that the $6,000s may need to be backtested to see if another higher low can be printed, which would need to be above $6850.  

Failure to close above here on the daily chart would most likely mean that Bitcoin is destined to head lower.

BTC USD 4-hour chart

BTC USD 4-hour chart. Source: TradingView

Looking forward

Clearly, the price of Bitcoin is shaping up for a big move. Currently, bulls appear to have momentum on their side, but there is the underlying issue of the overall downtrend in which Bitcoin remains locked in since summer.  

A break out to the upside could still follow with rejection and more downside. The objective is simple for the bulls: defend $7K and reclaim $7,555 as support.  

If there are still bloodthirsty bears, they may simply be waiting for liquidity to short at higher levels. All eyes will be on the U.S. today and the first half of the week will be critical for market participants who are eagerly anticipating the next move. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Litecoin ‘Largest Miner Capitulation’ Great News for Bitcoin — Analyst

Bitcoin (BTC) could have its bull market induced by Litecoin (LTC) as the latter enters a bullish renaissance, noted statistician Willy Woo has forecast.

In a series of tweets on Jan. 6, Woo, well known in crypto circles as the creator of data resource Woobull, highlighted an upturn in Litecoin’s fortunes in recent weeks.

Woo: Litecoin difficulty “in recovery”

Specifically, it is the altcoin’s mining difficulty that has begun rising once more after more than six months of decline.

The difficulty is a measure of how much computing effort is required to process transactions on a cryptocurrency’s blockchain. A drop in price can make miners retire due to low profitability, which triggers a drop in difficulty. This, in turn, has implications for network security.

Litecoin difficulty vs. price, 2011-present. Source: Woobull

Litecoin difficulty vs. price, 2011-present. Source: Woobull

Woo said the second half of 2019 was “the largest miner capitulation LTC has ever faced.” Data from Woobull confirms difficulty dropping from over 16 million last July to just 4.7 million in mid-December.

Since then, the difficulty has begun improving, currently standing at 5.1 million. This, Woo says, could not only produce a bull run for Litecoin but spill over to fuel the already bubbling Bitcoin market.

“Litecoin Difficulty Ribbon now in recovery,” he wrote in further comments, adding:

“Should set up a bullish breakout of the bearish channel. I wouldn’t be surprised if LTC leads a bullish breakout of BTC.”

LTC major gains yet to appear

Litecoin launched in 2011 as a hard fork of the Bitcoin Core client and is currently the sixth-largest cryptocurrency by market cap.

Despite losing considerably in the altcoin collapse of 2018, the coin’s performance improved in 2019. As Cointelegraph reported, LTC/USD jumped from $32 to $141 in the first half of the year — frontrunning Bitcoin’s own leg-up that began on Apr. 1.

In November, Cointelegraph contributor Keith Wareing forecast “significant” incoming gains for LTC holders. In the event, markets hit $61 before declining to $37 before Christmas. At press time, Litecoin traded at $45 on 1.3% daily gains, modest compared to Bitcoin’s 5.5%.