Over the past week, the cryptocurrencies market has shown that it is not ready for a sharp rise "to the moon,” which many investors had begun to dream of after some positive price action. They again talked about their dreams of Bitcoin reaching $20,000 and the acquisition of Lamborghinis for the tokens of projects stored in their wallets from past ICOs. But the market again pulled them from heaven to earth. And the topic of possible approval of requests for registration of crypto ETFs filed to the U.S. regulator, the SEC (Securities and Exchange Commission), remains questionable and it has become the most disturbing topic for the community. In earlier articles, ICBF investment experts wrote about the denial handed to the Gemini Exchange of the Winklevoss brothers, and their re-application was almost immediately rejected as well. It seems that this is not the last refusal, which leads to the disappointment of weak-handed investors who quickly start getting rid of their crypto assets. But there was a spoonful of honey in this barrel of tar after all. One of the commissioners of the SEC declared a strong disagreement with the rationale behind the department's decision. Hester Peirce noted the adequacy of the current level of regulatory standards and liquidity in the markets for Bitcoin to become the basis for the ETFs being created, for which she received a gentle nickname "crypto mommy,” and the number of subscribers to her Twitter account sharply increased to 17,100 at the time of writing of the review. Also, the market already has a "crypto daddy,” J. Christopher Giancarlo. He is an active supporter of cryptocurrencies and is the head of another U.S. regulator, the CFTC, until April 2019.
The struggle of the crypto community for the right to acquire Bitcoins and other crypto assets with the help of instruments regulated by government and tools available to institutional investors is continuing. Applications from CME and CBOE are still relevant, as well as from the investment companies VanEck and SolidX. The exact date for the verdict from the regulator is not yet known, although the SEC can tell us something as soon as August 10. A positive decision seems very likely. There are a lot of conflicting opinions regarding the timing of adoption and the need to create a product such as ETF among the experts of the crypto market. The head of Crescent Crypto Asset Management company Ali Hassan sides with more pessimistic forecasts on approval, suggesting a timeframe of 18 months.
The hopes for a rapid inflow of funds from investors in 2018 are tied to the advent of crypto funds traded on the exchanges. Only the laziest refrain from speaking about the creation of ETFs as the pages of specialized forums on cryptocurrencies bristle with such posts and hopes. The most frequent comparison occurs with the appearance of a similar exchange product for gold, which was followed by almost 480 percent growth in eight years. The increase in Bitcoin will surely be followed by the growth of altcoins in the future.
All of these misunderstandings with the acceptance and rejection of applications are being skillfully used by the whales to control prices. While the price of Bitcoin from the beginning of last week to the last day of July was between $7,800 to $8,500, large capital was actively accumulating positions for sale, and approximately the same positions were exhibited by ordinary investors. To assess the scale of what was actually happening right under the nose of the community, what it did not even notice, can be seen in the screenshot of the dynamics of the funds below.
In total, just for July 29, the first cryptocurrency was sold in the amount of 29,369 BTC, and if converted into a fiat currency, then the figure is approximately $240 million. Just think about these figures. Naturally, the market was not ready for such a test, and the bears quickly took the upper hand. A similar situation in the market took place around the $10,000 price point for Bitcoin in May of this year, after which the rates began to decline steadily to $6,000. But victory in the first round did not satisfy the bears and they decided to bring the fight to a knockout. A similar maneuver was carried out on futures contracts with Bitcoin. In the screenshot below, you can note the increased number of short positions, which was another signal for professional investors about the need to record profits on previously opened long contracts.
Based on this, we are building a short-term forecast for the dynamics of the market within the next two weeks using the daily chart. By the way, did you know that in the cryptocurrency market, the daily candle ends at three o’clock the next morning, and not at midnight, as is customary in the stock and other markets?
The bulls did not celebrate victory over the bears for too long as the price began to decline steadily from the unbreakable level of $8,500. It is too early to talk about the renewal of the collapse, but we should not forget about the necessary reprieve for any growth. Therefore, long-term goals in the form of levels of $10,000, $12,000, and $17,000 remain relevant. Consider it that the market is giving one more opportunity to buy the first cryptocurrency at attractive levels. Speaking about the possible goals of the coming weeks, we can note short-term goals in the area of $6,800 to $7,000, and even up to $7,200. It is necessary to first get confirmation for this idea, though, in the form of a closing below $7,500. At the same time, it is necessary to keep in mind the possibility of a deeper drawdown of Bitcoin if the $6,800 level is overcome.
If there is a sharp drop of Bitcoin on the chart, then, most likely, Ether and other altcoins will compete with each other in the power of the collapse. Therefore, it is not surprising that the improved version of Bitcoin created by Vitalik Buterin is showing a tumble. The rates are developing a speedy descent like an alpine skier from the area of resistance at $487 (23-percent Fibonacci retracement). And the first support is almost reached at the level of the June minimum of $406. Preserving the same rate of collapse does not exactly lead to depreciation, because it will be backed by supports at $358.56, $360, and $340. It is too early to talk about any possible reversals for Ether, as it will be like guessing on coffee’s tar content or using foil caps to protect thoughts against alien probing. The long-term targets for investment of $520, $530, and $570 remain relevant, but confirmation in the form of a break in the trend and a breakthrough of $487 will be required.
There is only one thing to say concerning the possibility of buying other altcoins: close their charts and do not pay attention to any (even the most) positive news in the form of a successful launch of the hard fork network, the planned hard fork, or the possibility of listing on top exchanges. Any movement on Cardano, EOS, or TRON now resembles pump-style games, when the news grows abruptly, but there is only a shadow on the candle left merely an hour after this movement. Therefore, you can try to make money on short transactions only, or you should stay out of the market altogether.