Crypto Market Analysis

Cryptocurrencies, especially altcoins, are inside a clear corrective cycle. Is there a crisis on the blockchain concept, or is it just technical price variations product of the trading activity? The fact that Bitcoin is currently holding almost 70% of the total value of the crypto industry may start sounding some alarms.

The objective fact is that some well-known top-ten crypto tokens are trading below its 200-day moving average among which are Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH), Litecoin (LTC), Binance Coin(BNB), Bitcoin SV (BSV), EOS, and Stellar (XLM).

The announcement of the Libra project on June 18 has brought to the front line the issue of instant value transfers, and, also, government agencies are starting to take more serious steps toward regulation of the cryptocurrency.

In that respect, the latest Financial Action Task Force (FATF), an intergovernmental organization founded in 1989 on the initiative of the G7 group has published a public statement  on June 21, just three days after Libra’s announcement, explaining how governments and entities should act to comply with the relevant FATF recommendations to prevent misuse of virtual assets.

Also, The US Congress and Senate took steps to understand better and regulate digital assets and Libra. 

Such degree of attention is escalating, and in India, an intergovernmental committee has recommended a total ban on cryptocurrencies, with hefty fines and penalties for those who do not abide by it.

 

The scalability problem

Blockchain is a special case of a Distributed Ledger Technology, but it is the most prevalent today. However, almost everybody knows most blockchain solutions have a scalability problem. Bitcoin can only manage seven transactions per second, Ethereum, the most widespread open solution for smart contracts can do no more than 15, while Litecoin 56 and Bitcoin Cash, the fast solution to Bitcoin does 61 tps, while Visa can currently manage up to 24,000 tps. Libra aims to perform 1,000 tps at their launch in mid-2020. Only two DLT's can compete with Visa in terms of speed: Ripple approaching 17,000 tps and Eos with 50,000 tps.

All this is is to explain that from a fundamental perspective, it is logical that the Blockchain-based sector to experience a period of doubt and lack of interest by investors, who seems to only have eyes for the Bitcoin as digital gold.

 

Bitcoin Technical Analysis

On its daily chart, Bitcoin’s price is moving inside a large descending channel. The latest interaction is also moving in a descending wedge. So, the overall picture is bearish. The question here is to see if the price is going to move to touch the lower trend line or this supply area highlighted in the chart in a cyan square would provide enough buyers to send the price up again an create a sideways channel such as the one pictured in purple. We set that the price is below its 50-day MA, which also means the sellers have dominated buyers.

 

The 4-Hour chart shows that the price has bounced twice near the $9,320 level and is heading up. This has been a region where buyers enter to raise the price in several occasions in recent times: But, if we look at the volume, we observe that bars with upward price movement (green) are shorter than red ones, happening in descending candlesticks. That means the price movement is still in the hands of the sellers.

 

Then, the most probable outcome for the following days is more downside, being the short-term highs right places to short the BTCUSD.

Supports	Resistances
9,300	9,650
9,100	9,870
8,870	10,000

 

Ripple Technical Analysis

Ripple is following a descending trend that started on June 22, just days after Libra’s announcement. Being Ripple a token designed to perform fast intrabanking settlements, the advent of the Libra coin is seen as a direct rival to Ripple. Added to that the fact that many investors are currently suing Ripple based on SEC guidance calling Ripple “an unregistered security” making money by breaking state and federal securities laws, and misleading the public on purpose.

 

On the daily chart, we see that the price has a supply area between 0.254 and 0.244. Yesterday the digital token made a timid bounce and currently is losing 0.5% and approaching that region again. XRPUSD price is below its 200 and 50 moving averages, and also the 50 MA points downwards. That situation clearly indicates that the sellers are in control of the price action.

Potential buyers should assess the technical and fundamental issues surrounding this digital pair before making buying decisions.

 

Litecoin Techincal Analysis

Litecoin's daily chart shows that the price was descending since June 22 when the altcoin peaked at $146.05, in a 7X movement starting from its December 2018 low. The 50-day MA is crossing its 200-day MA, which reinforces the impression that the price will continue descending.

 

H&S pattern?

I’m not a big fan of Head & Shoulder patterns. 50% of the time fail, so it has the prediction power of a coin toss.  Just for completeness, and after this caveat, We can see that the daily chart resembles a complex H&S figure. On this case, it only states that this digital pair has been broking key supports, and that explains the situation in which it currently is.

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