Pavel Shchipanov, head of the analysis and research group of the ICBF, shared the latest news from the world financial center with the readers of DeCenter and talked about how they influenced the market of cryptocurrencies in his weekly analytical op-ed.
August 2018 will go down in history as a month of pessimism. Subsequent refusals regarding the registration of crypto ETFs traded on the exchanges by the SEC regulator (the Securities and Exchange Commission), starting with the Gemini exchange (owned by the Bitcoin-billionaire Winklevoss brothers) and a number of other applications led to the first step of the catastrophe with Bitcoin, prompting its fall from $8,200 to $7,000. The second stage of the collapse was an unexpected decision to postpone the application of the Cboe exchange in the partnership of VanEck and SolidX to introduce Bitcoin futures on CME, Cboe, and other U.S. exchanges. It was on this joint application that the main hopes of the crypto community were pinned. If the VanEck SolidX Bitcoin Trust is allowed to be created, the investors’ funds would be placed on a reliable Cboe exchange (the Chicago Board Options Exchange) and would be insured against loss of access, and from theft as a result of unauthorized access. Pricing will occur on the basis of the current situation at the cost of BTC based on U.S.-based over-the-counter platforms. These arguments in favor of the inflow of funds from institutional investors made it possible to present an "optimistic" forecast for the growth of the Bitcoin rate to $50,000, as one of the enthusiasts of the crypto market Arthur Hayes said on air of the CNBC financial channel.
The consideration of the registration of crypto ETFs was not rejected or approved by the SEC. The commissars of this department made an unexpected move as they postponed the examination for 45 days. At the same time, they promised that following the results of the September 30 meeting, one of three outcomes is possible. Either the request will be approved and it will be a historic step, as for the first time there will be a tool for a wide range of investors, or it will be rejected, and this will be a new disappointment for the market, or proceedings will be instituted if there is any inconsistency with U.S. law. The communiqué did not give any specific reasons for the transfer. Most likely, the regulator does not want to make a mistake and they need more time to understand the whole point of the issue of creating an ETF for innovative assets. The market reacted to this decision with a confident decline. Below is an excerpt at the time of trading on Wednesday, August 8, 2018. As you can see, the decline occurred in the range from eight percent to 20 percent. And this is only for top-end crypto assets.
Now the new benchmark for the crypto market will be the last calendar day of September, when a decision will be announced immediately for nine ETF applications from Cboe, Gemini, and a number of other financial organizations. Internal sources in the SEC have already spoken about a 90-percent probability of approval for at least one request before the end of the year, so investors' optimism has not yet fallen together with the price of cryptocurrencies. At the same time, two ProShares applications from the electronic exchange market at the New York exchange NYSE Arca are still "in the game.” They are now "dark horses" because of inattention to them earlier from the community, as they look less significant compared to Cboe. A positive decision (and it can be granted on August 23) will restore optimism to investors and as a result, active purchases of Bitcoin are likely to resume, and after a while, the altcoins will move into the green zone. The decision to postpone the consideration of the application of the NYSE Arca on September 30 or its rejection will allow the bears to continue to celebrate their victory.
Bitcoin continues the development of the trend and is seeking the "bottom" of its decline. The current support was the line of the upward trend (the brown slope on the chart below), also the support of the region was at the level of $6,200. The persistence of negative sentiment among investors due to the ETF will lead to a test of the stability of price level consolidation in the minimums of 2018 at $5,850 to $6,020. Maintaining the momentum for sale below $5,800 will open the way for the values previously mentioned in the reviews of $5,500 and $5,300.
A corrective rebound to $6,500, $6,670, and $6,800 is also possible from current levels. A record decrease in 11 days with one mini-correction in the long term will lead to a powerful pullback of the price upward. Potential resistance in the event of overcoming $6,800 will be the recently overcome levels of $7,000, $7,260, and $7,500.
Summing up the technical and fundamental picture of Bitcoin events, we note the misunderstanding by investors of the emerging picture—one that is being skillfully used by the whales. They immediately gain positions for sale before the negative events on the market, thereby collecting the positions of those who believe in the long-awaited growth "to the moon.” Therefore, now the best strategy is to "fasten your seatbelts and keep your vomit bags in front of you" and be out of the market, although it is possible to earn big money together, but not more than 50 percent of your capital. Now let's see what is happening to Ether and other altcoins.
Ether and Other Altcoins
The second-largest cryptocurrency by capitalization shows an even stronger fall in comparison with Bitcoin, and any corrective growth is perceived with distrust. Among other altcoins, the situation is no less comforting in connection with the "surprise" from the SEC. Current support is located at $360 and $340, which is 23.6 percent correction on the lines of the Fibonacci proportion. Attempts of correction from current levels will be met at the levels where dynamics reversals of $400, $420, and $440 occurred earlier.
There is no sense in allocating the other altcoins into a separate group this week since they have all already formed a confident downward trend. The rumors about the partnership on August 15 of Cardano (ADA) with the Alphabet corporation (which owns the Google search engine) have so far led to a slight increase, although in itself this news is a "bomb.” Investors who are ready to risk their money have already purchased this asset in connection with the potentially-finalized figure "Inverted Head and Shoulders" on one-hour timeframes. In the event of a breakthrough in the value 0.000019 paired with Bitcoin to the top, this asset can bring a speculative profit when the targets reach 0.00001982 and 0.00002050. But, once again, I repeat that this deal is more suitable for speculative trading.