Crypto Investor Report, August 6
Summary
Last week Bitcoin was driving around in a pivotal area, with the bearish direction being the most plausible path of least resistance. Nevertheless, price action aimed for the reverse direction and it has torn down several levels of resistance above it, making its way up to the $12,000 level.
After ripping the aforementioned resistance and tagging the $12,500, it has retraced down a bit to find support in the mid $11,000s. With this failed breakthrough, it seems plausible that Bitcoin will need to build upon these levels. Raising the major support from $10k to $11k, and keep the pressure on the $12k up to $12.5k levels, will probably be required until we can see another major move up. Bears will also have a say on this matter, and will actively play against this construct. In what extension can they prevent it from happening, still remains very diffuse in the present market conditions.
The prospects of a long-waited alt season now seem to get even dimmer as Bitcoin keeps gaining yet another share of the market. Its dominance now aims to reach 70%, a value only seen back in April of 2017. Allied to that, its computing power also set recently a new all-time record, with almost 80 Mn trillion hashes per second, meaning that more miners are joining the play and are perhaps attracted by the most recent price action.
In the Spotlight
- Global regulators warn on the privacy risks of Facebook’s Libra
- South Korea declares partial ‘regulation-free’ zone for crypto companies
- Coinbase considers the addition of eight new tokens
- Bitcoin’s computing power sets record
- Bitcoin dominance nears 70% for the first time since December 2017
- Walmart files a patent to create its own Libra-like stable coin
- AWS backs $100,000 competition to ‘change the face of Blockchain’
Market Overview
After several weeks of decline, total market capitalization seems to have found a new trend and followed up Bitcoin’s most recent run. From $263 Bn seven days ago, to over $307 Bn at the time this report is being written. Weekly’s maximum was reached when Bitcoin tried to pierce the $12k mark, reaching $319 Bn, near the same local resistance level as in the 12th of July.
As for dominance concerns, another impressive week for Bitcoin. Its value is now over 68%, reaching values only seen before April of 2017. All other major altcoins, with the exception of Monero (XMR), lost some significant share of the market to the leading cryptocurrency.
Looking into the digital assets with at least (or near) $1 Bn of market capitalization, the weekly performance was remarkably positive. Bitcoin lead the run, reaching over 23% in a seven day period, outperforming — once again — all other top digital assets.
Monero (XMR) with near 20% of gains and Tezos (XTZ) with over 16%, were the next highlights of the weeks. The former still has some gap to the 100 dollar mark ($93.14) while the latter is aiming to reach $1.50 (currently negotiating at $1.41).
On the other hand, Cardano (ADA) with 7.5% losses and Stellar (XLM) with -4.13%, were the underperformers of the week, and are negotiating now at $0.0552 and $0.0798, respectively.
Looking into the top-20 rankings by market capitalization, we see that the most notorious changes go in line with the 7-week performance. Monero (XMR) climbed up the charts, from 12th to 9th, and Tezos (XTZ) from 17th to 14th. Cardano (ADA) lost also another place to TRON (TRX), as a result of its poor weekly performance. The bottom place, Ontology (ONT), has now a wider gap to NEM (XEM), but still manages to own over $500 Mn of market capitalization.
This week, we highlight also Bitcoin’s new all-time record in computing power dedicated to securing its Blockchain. Assuming that this additional power was originated from powerful ASIC miners, it means that more 100k top-of-line miners could have switched on within the past two weeks.
Bitcoin Market Analysis
The past week saw Bitcoin making several moves up in a somewhat risky “resolution” price range. While following closely what seemed like a bearish script with a high probability of pivoting down, it ripped through several levels where that mentioned pivot could have materialized itself.
The bearish scenario that many in the community were eyeing for was invalidated and instead gave room to bullish action towards the end of the week. This became particularly clear after Friday end of the business and over the weekend when price decidedly broke above $10,400, which strengthened the shift from a downward/neutral bias towards eyeing logical targets above.
The daily chart above shows a clear shift from responding to oversold levels (OS) to a reaction on overbought levels (OB), with a cross above the longer-term moving average 25x5 showing bullish momentum. The price at the time of writing is around $11,700 after a retracement tagging almost $11,400.
The range for the week is expected to respect the 38.2 Fibonacci support level around $11,000 and to find resistance at $12,500-$12,800, with this last level being a potential reversal zone (should the bearish harmonic pattern play out). If $12,800 is conquered, a burst above previous highs surpassing $14,000 with volume would be necessary to confirm a bullish continuation, otherwise, short hunting for a return to the $9,000-$10,000 area is the downward scenario.
Let’s have a top-down look at the Market State dashboard for an integrated view of the various time frames:
The weekly chart shows a clear and strong rejection of the cloud upper level and regained the 3x3 displaced moving average — not only a retest but a clear move above this threshold. This momentum shows from the bulls means that $10,000 is likely a strong support level in the short to medium term. Any explorations below it up to the $6,000 zone (a possibility which we are not ready to pronounce dead) will not take place in the coming weeks unless a very strong unexpected (fundamentally-fuelled) shift takes hold of price action.
The daily chart indeed shows a bullish market structure and the double bottom hypothesis in full colour, as mentioned in our previous issue. The bulls bought up sub-$10,000 and now the $11,000 level will function as support and early warning for a change in bias. Above, we see resistance at $12,000 — $12,500 — $12,800 logical profit-taking levels. Expect some back and forth movements this week between those barriers before another leg outside them materializes.
The 4-hour chart shows us a retracement after tagging the $12,500 level. If it is as shallow as the retracements preceding it, we could have a shorter range of $11,500 up to $12,300, but it could go deeper without affecting the higher time frame-supported bullish context (which tells us to buy the dips up to $11,000-$10,800, after which things start to become less clear).
Looking Forward
This week we are most likely interested in buying Bitcoin dips up to $10,800 to capitalize on up moves up to the potential pivot level in the mid-high $12,000s. Shorting could be a potential move at the aforementioned pivot level but requires re-evaluation as the action develops there. We’ll also keep monitoring selected altcoins as invariably some exceptions to the rule surface out and occasionally outperform Bitcoin.
Altcoin Analysis
In general, we have seen a continued worsening of the downtrend. Very few pairs are overperforming Bitcoin, the majority are making consecutive lower highs and lower lows, with some names making fresh lows. This leaves very few options on the table to play longs beating BTC performance. Monero (XMR) was one of the exceptions holding its own, while some other names were interesting for USD pair plays too.
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