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Bitcoin Charts Minor Bounce Amid Brexit Optimism
BTC: Price: $8,050 | MCAP: $145.00 Billion | 24-Hr Volume: $15 Billion
Short-term trend: Bearish
Bitcoin picked up a bid around $7,970 at 08:00 UTC today and rose to $8,130. The price rise coincided with the news that a Brexit deal has been agreed between UK and EU negotiating teams before a meeting of European leaders in Brussels.
The crypto market community, therefore, has started speculating that Brexit optimism is boosting BTC and could end up triggering a notable rally in the top cryptocurrency.
That narrative, however, lacks substance as majority of investors consider BTC as a haven asset. BTC, therefore, should have come under pressure on Brexit optimism – a risk on news.
Some investors may argue that BTC is a risk asset, as suggested by a recent study, and is cheering the Brexit deal news. While BTC may be a risk asset, the cryptocurrency has rarely taken cues from Brexit-related news flow in the past.
Further, political experts do not see the UK parliament approving the new deal. Hence, the optimism looks premature and has little do with the minor price rally in BTC.
The cryptocurrency remains on the defensive, having closed below $8,000 on Wednesday, bolstering the already bearish setup represented by Tuesday's outside bar candlestick pattern and Oct. 11's strong rejection at the 200-day average.
All-in-all, BTC remains on the hunt for a retest of recent lows near $7,750. The bearish case would weaken if prices rise above the 200-day average, currently located above 8,700. However, 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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Monero Skyrockets
XMR: Price: 7408 Sats | MCAP: 127,813 BTC | 24-Hr Volume: 18,629 BTC
Short-term trend: Bearish
Up 13 percent, monero (XMR) is the third best performing top 100 cryptocurrency today, according to CoinMarketCap.
Notably, XMR's bitcoin-denominated exchange rate (XMR/BTC) jumped to 7493 sats a few minutes before press time. That was the highest level since Sept. 20, as per Binance data.
The bullish move is backed by a rise in trading volumes, as seen in the daily chart below. The cryptocurrency, therefore, looks set to test the trendline connecting April 2 and June 20 highs. As of writing, the trendline hurdle is seen at 7900 sats.
The 14-day relative strength index is also reporting bullish conditions with an above-50 print, signaling scope for an extension of the ongoing price rally.
Long-term trend: Neutral
The bullish divergence of both the RSI and the Chaikin money flow index (CMF) indicates seller exhaustion. The bearish outlook, therefore, stands neutralized. A bullish reversal would be confirmed if the ongoing corrective bounce ends up invalidating the bearish lower highs setup with a move above 8,090 sats.
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ICON Awaits Range Breakout
ICX: Price: 1971 BTC | MCAP: 9,858 BTC | 24-Hr Volume: 806.08 BTC
Short-term trend: Neutral
ICON, ranked 61 as per market value on CoinMarketCap, is currently reporting a 5 percent drop on the day.
Even so, the outlook for the cryptocurrency's BTC-denominated exchange rate (ICX/BTC) remains neutral, as the Bollinger Bands (volatility bands placed +2,-2 standard deviations above the 20-day moving average) are moving sideways, a sign of lack of clear directional bias.
Note that the bands have narrowed significantly over the last three weeks. An extended period of low volatility often paves the way for a big move on either side.
Hence, traders should watch out for a break above the upper band or below the lower band. The former would imply a bullish breakout and open the doors for 2750 sats and the latter would represent bearish breakdown and expose August's low of 1610 sats.
Long-term trend: Bearish
The series of lower highs and lower lows and a below-50 reading on the relative strength index on the weekly chart indicates the path of least resistance is to the downside.
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Bitcoin fell on Wednesday despite China's liquidity injection, contradicting the popular narrative that the top cryptocurrency is a hedge against inflation-boosting policies.
The premier cryptocurrency fell near 2 percent to levels below $8,000, according to Bitstamp data, marking a strong follow-through to Tuesday's bearish outside bar candle and strengthening the case for a test of recent lows near $7,750.
The price drop happened during the U.S. session, that is, hours after the People's Bank of China (PBOC) unexpectedly injected 200 billion yuan of one-year cash via medium-term lending facility.
Many observers believe BTC has all the properties of gold, which is a classic hedge against inflation and usually responds positively to monetary stimulus. BTC, however, lacks a credible story as an inflation hedge and the fact that it remained depressed despite China's stimulus only indicates that it is an uncorrelated asset.
Note that the European Central Bank cut rates deeper into the negative territory in September and is set to resume the bond buying program from Nov. 1. Even so, BTC fell from $10,000 to $8,000 in the last week of September.
Also, one of the dominant narratives to explain BTC's drop from $10,000 to $8,000 was the liquidity crunch in China. If that was true, BTC would have rallied on Wednesday following the PBOC's stimulus announcement. |
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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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