In the weekly analysis column, Pavel Schipanov, head of the ICBF analysis and research group, talked about the reasons for the collapse in the value of crypto assets and when to expect the market to reverse.

The long phase of Bitcoin movement without clear guidelines, which we analyzed in the last review, finally ended with panic sales of all cryptocurrencies, which is confirmed by the screenshot below. This is already a success because there was an exit from the channel of $6,500 to $6,600, which, for a long time, held back any attempts to move the rates up or down. But finally, that very moment came, which allows us to say that the powerful market movement that we had been expecting has begun. At the moment, no broader consolidation in range of $6,000 to $6,800 has occurred and, therefore, the latter also remain relevant, and only overcoming them will be a signal to send the price either to the “deep basement” or “to the moon.”

Graphical display of the dynamics of the crypto market at the moment as of October 11, 2018
Graphical display of the dynamics of the crypto market at the moment as of October 11, 2018. Source.

It is time to deal with the causes of the current dynamics because there is really a lot of news. First, the uncertainty continues with where Tether funds are located after they were withdrawn from the Noble Bank, and reports that there are insufficient funds and problems on the Bitfinex exchange related to the stablecoin also draw attention to themselves. In some news feeds, rumors began to appear that Bitfinex funds are now in the accounts of one of the largest international banks, HSBC, but this information has not received official confirmation. In favor of this idea is the aspect that new users were requested to transfer funds to accounts of Global Trading Solution LLC with the recipient bank in the form of the American branch of HSBC when opening an account in U.S. dollars.

This detective story could not just end and, aggravating the already difficult situation, came the news of a temporary blocking of taking deposits for one week in fiat currencies, such as the U.S. dollar, euro, and yen. Most likely, the acceptance of deposits by the Bitfinex exchange was not agreed with the Global Trading Solution, and the open account was blocked. Then, everything is quite logical. It is worth worrying about the safety of funds because in the case of support for panic, Bitcoin sales will continue. But will they also be safe if they are converted to Tethers and not other stablecoins?

Therefore, the most interesting question that remains hanging in the air is whether Bitfinex, one of the top three among crypto exchanges in terms of daily trading volume, is solvent? Of course, the financial institution itself declares its financial solvency and, in support of this, presented reports on the movement of funds on part of their wallets in Bitcoins, Ethers, and other funds. But the crypto market did not believe much, which led to a reduction in capitalization to an even value of $200 billion, although at the peak of January 7, this financial indicator exceeded $826 billion.

Dynamics of capitalization of the crypto market in 2018
Dynamics of capitalization of the crypto market in 2018. Source.

Secondly, the SEC vs. Bitcoin ETF drama has again become relevant, which began to fade into the background and ceased to have such a significant impact on the market, as it was at the time of the first refusal in July. Initially, nine applications were submitted, including those with the strongest positions from the Gemini exchange and the joint application of the VanEck SolidX Bitcoin Trust ETF. Now, this story is more like an unsuccessful comedy, because after a period of uncertainty with the new terms of consideration this week, a “new hope” appeared. The SEC commissioners reported a new gathering of opinions from both supporters of the introduction of a new instrument for the financial market and from opponents until October 26. And already, on November 5, the regulator officials can vote on the basis of the new information. If at least one of the proposed bids is approved, the market will receive a powerful impetus for growth, because the most controversial regulator will give the crypto market the “green light” to attract funds not only from traders or large investors who know the intricacies of the market but also from ordinary investors who want to make a profit . Thus, according to our estimates, in 2019, the crypto sector may attract several billion dollars. This news will give a positive signal for the market if approved, but the rejection of these applications can lead to the opposite effect, and cryptocurrency rates will go in search of new annual lows.

The third news, which contributed to the crushing collapse of the crypto market, was the announcement of the failed results of the ICOs that took place in 2017. 46 percent of the ICOs did not collect the necessary level of soft caps to finance their projects, but the majority of those who collected the necessary funds for the development of the ICOs also failed to develop and were ultimately unprofitable. According to other estimates, the cumulative fees of all projects carried out already reached $28.4 billion in September and by the end of 2018, they can potentially surpass $30 billion. Moreover, most of the funds received were in this year. But let us add a spoonful of honey to the barrel of tar by describing the situation on the ICO market. France, the United Arab Emirates, and South Korea are going to give the process of primary fundraising through the sale of tokens a legal status. Naturally, the attraction of such a volume of funds could not but arouse the interest of state regulators. In the future, it is worth waiting for similar steps from other leading global central banks.

Now that we have analyzed the news affecting the market, it is time to move on to the charts.

Bitcoin

The long-awaited powerful breakthrough is visible on the chart, although the decline has stopped after it, and now consolidation continues in the region of $6,300. The maintenance of momentum for further movement will meet support at the previously designated levels of $6,000, $6,111, and $6,200. As can be seen in the chart below, there was an exit below the rising trend line (marked in green), which, when new negative news arrives, will lead to disappointment of investors in the idea of ​​further growth. A breakthrough below $6,000 will be the basis for an even larger number of short deals with the first goals in the form of consolidation of $5,776, $5,880, and $5,600.

BTCUSDT chart, daily timeframe
BTCUSDT chart, daily timeframe. Source.

Cancellation for this idea will be a breakthrough above the powerful resistances of $6,820 and $7,000, where the upper limit of the technical indicator "Bollinger Bands" passes now. Overcoming them to the top looks like an unlikely scenario, but we will denote it. A withdrawal above $7,000 will make it possible to reach the $7,200 area, where the 200-day simple moving average is now taking place and consolidating at $7,375, $7,500, and $7,800.

Ether and Other Altcoins

Following the Bitcoin market, the altcoin market rushed to conquer new minimum values as the most promising strategy now is either to be out of the market or to open short positions for a small part of the deposit. Ether confidently rushed up and reached support in the cluster area of ​​$193 and $200. Only a powerful Bitcoin crash will knock the price of Ether down. Potential targets in this case will be $180, $160, $144, $131, and $100. An alternative scenario in the form of growth of the second largest cryptocurrency capitalization will begin to develop subject to overcoming the level of $230 with targets of $240 and $251.

ETHUSD chart, four-hour timeframe
ETHUSD chart, four-hour timeframe. Source.

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