When the rate of the oldest cryptocurrency reaches $6,000, the market will be awash with sales in the opinion of analyst Jani Ziedins. When analyzing the market of cryptocurrencies, some try to indicate the coveted lower level of the price of Bitcoin, after which the "snowball" effect may be triggered, and the market decline will no longer be controllable. Ziedins suggested that the cryptocurrency market should be ready for a new fall by saying "Bitcoin had a terrible time in May, and it looks like things will get worse." And he was partly right, as judging by the results of June, it is clear that last month was no better for Bitcoin than May.
Ziedins said that "we are in a situation of a long-term downtrend, and lower levels still lie ahead. Overcoming the resistance level of $7,000 will already cause a wave of sales." As early as June 10, Bitcoin cost $6,800, just edging to the declared terminal level of $6,000. Market capitalization was then balancing at around $300 billion. In mid-June, it seemed that the decline below the low of the year at $5,947, which was observed on February 9, would be a big shock for the market. On June 22, however, Bitcoin found a new price bottom of the year at the level of $5,935. The last time such a value of the cryptocurrency was observed was in November of last year. And on June 24, Bitcoin even punched through that bottom, reaching around $5,890. After this and until the middle of this week, the No. 1 cryptocurrency showed growth, growing more expensive in the last seven days by $700. There was no panic, so Ziedins was mistaken in this regard.
The instruments of technical analysis that came from the classical securities and forex markets in the form of the alignment of resistance lines that control bears, as well as the support lines that are maintained by the bulls, are actively used in forecasting the behavior of the prices of cryptocurrencies. Here is what happens: with the same picture of the past that analysts have, they are building lines that do not coincide. This again indicates the subjectivity of the approach of this method of forecasting.
On June 8, Robert Sluymer, an analyst at Fundstrat Global Advisors, assured that his line analysis shows that the market will go up and that Bitcoin will exceed the support level of $7,800, and then rush to a mark of $9,500. This did not happen. June made it clear that Bitcoin’s strongest resistance line is at $6,000, below which cryptocurrency No. 1 did not stay for long. Panic did not ensue, although at the time of reaching the lowest point of June, the well-known economist Nouriel Roubini urged the cryptocurrency world to "capitulate.” On the same day, June 29, Bloomberg published an editorial in which the situation on the market was equated to the collapse of the shares of dotcom companies in the late 90s of the last century. Meanwhile, such a low price for Bitcoin attracted even Mohamed El-Erian, a senior adviser to Allianz, who is confident that Bitcoin should be bought as soon as its price falls below $5,000.
Of course, the task of any analyst is not only to forecast the lines, but also to skillfully explain using a mass of factors why the prediction did not come true if the cryptocurrency behaved differently than it was shown on the chart. In reality, however, this leads us to the idea that the cryptocurrency market needs to have normal derivatives, that is, not only futures for Bitcoin and Ether but also options and swaps. In this case, traders can use a set of options and make money both on the upward and downward market, which is what Wall Street does with securities where option trading is developed. And what do we see? The yield of the Nasdaq 100 index over the past seven years was 220 percent, and the S&P 500 yielded 133 percent. The HODL strategy gives better results on the cryptocurrency market than in the classical stock market. Gold showed a loss of 18 percent, silver 54 percent, and platinum 53 percent. No robots and bots on the cryptocurrency market can provide the same efficiency that automated programs on Wall Street armed with option strategies ever could. It is still possible to short on the crypto market now, but the absence of cryptocurrency options does not fully hedge the risks.
In addition, another important point that makes the cryptocurrency market yearn for further development is the lack of mass lending in crypto coins. While teams of different altcoins are fighting for the distribution of their coins, it becomes clear that until these altcoins become credit resources first for trade, and then for enterprises and companies in traditional sectors of the economy, from agriculture to industry, cryptocurrencies will be enclosed in a limited space. At the same time, the opinion of the representatives of the crypto community that someone should come from outside and start doing these things is erroneous, as there are jurisdictions, for example, Liechtenstein and Malta, with Bermuda on the way, where it would be possible to establish transactions with derivatives on cryptocurrencies. Crypto banks can also be established that could work not only on buying and selling crypto coins but could also act in the direction of asset tokenization and securitization of tokens, as well as perform a full range of banking operations similar to those that are conducted with fiat money, for example, issuing loans and opening deposits in cryptocurrencies.
Another important point that makes the modern market of cryptocurrency trade immature, and, accordingly, difficult to predict with the help of technical analysis, is its dependence on Bitcoin. Indeed, at the end of June and the beginning of July, there was a flow of funds into Bitcoins against the background of the general depressive situation on the market, as a result of which its share in the total capitalization of the market grew to a record 43 percent this year. Bitcoin, along with "stable cryptos," plays the role of gold in the classical financial market. Such an honorable mission does not, however, bode well either to Bitcoin (the negative yield on gold is quite evident, and the cryptocurrency is starting to look a lot like gold), or the market, which becomes dependent on large holders of Bitcoin. Such a large share of Bitcoin is an anomaly from the point of view of the classical securities market. For example, in the S&P 500, the largest company, Apple, accounts for only 3.9 percent of the total market capitalization of this index. To reduce the dependence of the cryptocurrency market, it is necessary to increase the number of currency pairs with fiat, and this depends on the existence of a legal framework that opens access to direct transactions with crypto coins, including using bank cards.
As for the further dynamics of the cryptocurrency market, there are polar opinions. The June collapse of Bitcoin to a level of $6,000 makes us recall the January forecast of Quinlan & Associates, according to which the No. 1 cryptocurrency will fall, reaching a "bottom" of $1,800 by the end of the year.
In the absence of reliable predictive methods, the market is looking for various opportunities. Some suggest watching Google trends, as well as the public mood, which manifests itself on social networks or in the Bitcointalk forum. It is also possible to rely on the Point-Set Topology method, which is used by the crypto entrepreneur John McAfee, but it does not give an accurate forecast, as the crypto enthusiast postponed the deadline for the growth of Bitcoin to $15,000 from June to the end of July. Although on May 24, he published a forecast about a significant increase in the growth of Bitcoin in the first month of summer. But the main thing is that the cryptocurrency world has proven that it is not a "bubble" and can grow again, even when a negative information field is being formed around it. A special feature of crypto coins is that a significant number of investors attach immaterial value to them, as it was discovered by the Bank of Finland. This means that it is a transcendence to a new world for many crypto coin holders, where new technologies will play a key role, and the very concept of "asset price" loses much of its meaning. That is why the cryptocurrency market will never be stricken by panic typical of all financial "bubbles.”