Pavel Shchipanov, head of the analysis and research group of ICBF, continues the weekly analytics column and talks about the most important industry events that have influenced the rates of the main cryptocurrencies.
This week has "put an end to" the new hopes of optimists regarding the launch of ETF on Bitcoin. We can even say that the unfinished month of August has already become a "black" month for the crypto market. The SEC's Сommissioners decided to reject the ProShares bid from the U.S. NYSE exchange. Of course, the regulator received eight more applications to launch ETF from other companies, but these applications are much weaker compared to those rejected this week. Now, the most urgent issue for investors who are not ready to delve into the subtleties of the analysis of the dynamics of Bitcoin and the work of decentralized exchanges will be the issuance of approval of the ETF application from VanEck and the Chicago CBOE exchange, on which the futures contract for the first cryptocurrency is already being traded. It has the potential to be approved at a meeting on September 30, as it meets the main requirement of the regulator—liquidity. Therefore, as we approach this date, we can expect an increase in optimism among the crypto traders, and until this point, the market will remain depressed, which the whales are enjoying with great pleasure, as we wrote earlier in the market review.
But the next morning, the optimism returned to the crypto market, and SEC representative Hester Peirce, who received the affectionate nickname "crypto mom" for her enthusiastic support of the innovation sector, reported on the revision of the decision in less than 24 hours after the decision to refuse nine applications, including a joint application from ProShares and NYSE. In continuation of this detective story, we note the confirmation that came in the form of official letters to the advisor of the NYSE exchange, as well as a similar copy sent to the CBOE directorate. Therefore, it is too early to speak about a complete rejection of the idea of launching an ETF, and the market has a chance to show growth again, which was demonstrated by early Friday morning rates, which rushed through an important resistance at $6,500. There is no exact date for a new review, so the market will hopefully follow all the news from the regulator. Most promising is the assumption that absolutely all applications for the launch of ETF for Bitcoin will be considered at the meeting on September 30.
It is now time to reveal the truth about what stage Bitcoin is at now. For this, look at the graph below, and you will see a familiar picture. A "quiet phase" took place in the market, especially in the Bitcoin market, before 2017, when the volatility was minimal and the increase was $100 per day maximum. The "recognition phase" lasted until October 2017, when the preparations for the start of trading in Bitcoin futures began at full speed. That was when the institutional investors with the capital of banks and large investment funds came to the market for the first time. Take a look at the Bitcoin graph and you will see a small trap for confident investors in the near future, although, at that time, active purchases began with "big business.” And the period from October to mid-December 2017 was the period of "mania,” when the first investors who had never traded in the stock or currency markets came to the crypto market. The inexperienced traders immediately fell into the trap of their greed and raised the cost of Bitcoin from $6,000 to almost $20,000. And on the day when the first professional tool, the Bitcoin futures contract, was launched, a record price of almost $20,000 was set on the CME. Although some experts dream about a price of $50,000 for one Bitcoin, that is still a fantasy.
And now, the most urgent issue is the stage of the "blowing bubble,” at which the market is currently located, and that is desperation or surrender. If the rates can overcome the level of support at $6,000, then this will lead to further collapse, and the waiting strategy will be unprofitable, as it is very difficult to predict where the bottom of this decline will be. And there is no news, which could unambiguously suggest that a price turn is on the horizon. Rather, on the contrary, the news feeds are full of negativity. In China, the cryptocurrencies are banned and events dedicated to blockchain and cryptocurrencies are being dispersed, all due to the threat of scams. Earlier, similar steps were made in Saudi Arabia. Let us agree that this is not the most encouraging news—but is it all so pessimistic? Let us look at the charts of individual cryptocurrencies.
For the third week in a row, analysts' reviews can be found mentioning levels ranging from $5,850 to $6,020 and resistance at $6,400 and $6,600. These values are holding Bitcoin, like bewitched sentinels set to guard the gate to the treasures. And this comparison was not used by chance, because a breakthrough up or down from the formed channel will be rapid and bring profit to those who advance to open positions in the right direction. These investors can lose not only a part of their capital, however, but also their nerves in the course of exhausting jumps up and down. Therefore, it is better for conservative investors to stay away from troubled crypto markets for now. Those set to make a profit on speculative transactions will have to use only a part of their deposit and never "go all in."
As you can see on the daily chart below, the upward trend line connecting the lows of 2018 remains an important support. If the price can consolidate below this line, then we should expect a new wave of decline with the first targets at $6,200 and $5,800 (more precisely, even $5,776), and closing several candles below will give a chance to fix profit on new deals in the areas of $5,500 and $5,300. A confirmation of the idea of growth will be the departure of several daylight candles above the $6,670 to $6,800 area of the downward yellow trend line and a 200-day simple moving average, which will lead to growth up to $7,375 to $7,500, or even as high as $7,800 and $8,220.
For the time being, Bitcoin cannot decide which side to choose. But this is only at first glance. Now there is a fine game of "money hedging" from inexperienced traders, so on the chart, you can note the sharp ups and downs of the price, then no-less-rapid downward movements. A similar situation full of uncertainty can be seen in the market of altcoins.
Ether and Other Altcoins
Ether continues a steady decline with attempts to outperform Bitcoin on profitability for any slowdown in the fall of the first cryptocurrency. Sad times have arrived for the second asset by market capitalization. Ether cannot penetrate the "glass ceiling" in the form of a level of $300 and already goes beyond the lower limit of the wedge model, which is traditionally a figure demonstrating a continuation of a trend. And given that the trend before was downward, then, most likely, the price will reach the first support at $251. If the rejections of the ETFs for Bitcoin continue to affect the minds of investors, then we can expect a new wave of decline in the area $193 to $200. The second option for Ether, which is subject to the breakthrough of the upper boundary of the wedge, will lead to an increase in the area of $340 and $360.
As part of the long-term strategy, let us consider the possibility of adding Ripple, cryptocurrency number three from the CoinMarketCap rating. The highly-positive exchange dynamics of this asset in the future will be affected by the fact that the platform is being tested by American Express and Western Union for processing cross-border payments on xCurrent and xRapid, as explained by Ripple CTO and technical director Stefan Thomas. In addition, the company already has partnerships with large capital in the form of Santander, UniCredit, UBS, and 60 credit institutions in Japan, which will allow cross-border banking operations to be carried out at the highest possible speeds. All these factors are the basis for the success of the token, intended primarily for payments. Therefore, provided market recovery begins, you can add Ripple to your portfolio at a price at or below the $0.25 to $0.30 area. The target for growth will be the area of $0.84 to $1 (23.6 percent correction along the Fibonacci levels). It turns out that it is possible to make some "Xs" that so many investors are dreaming of with the third most popular cryptocurrency, and not only on assets from the second thousand by rating or by ICO.