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Market data is provided by the HitBTC exchange.
The selling in cryptocurrencies dragged the total market capitalization down to about $106 billion on Dec. 7. The crypto market has lost more than 87 percent of its value from the high achieved in late 2017.
The latest leg of selling gained traction on the news that the United States Securities and Exchange Commission (SEC) has delayed its decision on Bitcoin (BTC) exchange-traded funds (ETFs) until Feb. 27 of next year.
Based on the performance of the Directional Movement Index and the Average Directional Index, Bloomberg Intelligence analyst Mike McGlone expects Bitcoin to drop to $1,500.
The fall has scared away most retail investors. Nevertheless, crypto-focused institutional asset manager Morgan Creek Digital believes that its Digital Asset Index Fund — a basket of ten major crypto assets — will offer better returns than the SPX over the next 10 years, starting from Jan. 1, 2019. Morgan Creek Digital is ready to wager a $1 million bet on their forecast.
The bear market has been good for the stablecoin Tether, which continues to climb the ladder in terms of market capitalization. It is now sitting at the sixth position, threatening to break into the top five if the selling continues.
As Bitcoin SV, which has recently hard forked off from Bitcoin Cash (BCH), has a few days of trading behind it, we shall introduce it in our analysis from today onward.
BTC/USD
Bitcoin has plunged to a new year-to-date low, but the decline is still not showing any signs of slowing down. The previous low of $3,620.26 did not offer any support, which demonstrates a lack of buying at the current levels. We expect the $3,000—$3,500 zone to act as a stronger support.
However, if the BTC/USD pair dips below $3,000, the fall can extend to $2,416.52, which is the pattern target following the break down from the pennant.
The current situation is opposite to last year when traders were expecting the price to skyrocket. Now, most believe that digital currencies are doomed. We believe that the selling has been overdone, and a pullback should be around the corner.
Still, we want to see evidence of strong buying at some support before initiating fresh long positions. Our positions suggested earlier were closed at $3,800 and $3,500.
The lower the cryptocurrency falls, the closer it gets to the bottom. Therefore, we suggest traders be ready to initiate long positions upon the signs of a probable bottom. Unlike on previous occasions, when we had proposed using only a portion of the usual position size, this time we shall recommend using the normal position size. The risk-reward is getting attractive at these levels.
XRP/USD
Ripple (XRP) is still above its year-to-date low, but the price is fast approaching those levels. Currently, the price is at the support line of the descending channel, which is likely to hold.
A bounce from the current level will face resistance at $0.33108, and above that at the 20-day EMA. Conversely, if the bears break below the support, a retest of $0.24508 is probable.
We continue to like the XRP/USD pair because it has been outperforming a number of top digital currencies. Therefore, we suggest traders hold their long positions. We shall propose adding more when the pair turns around.
ETH/USD
Ethereum plummeted to double digits on Nov. 6, and has not recovered yet. Currently, it is trying to bounce off the support at $83. We expect some buying in this area.
If the bears maintain their selling pressure, the ETH/USD pair can drop to the next support at $66. The selling has been so intense that the RSI could not even rise above the oversold zone, from the deeply oversold levels.
The first sign of a likely change in trend will be when the price sustains above $100. Until then, it is best to wait and watch. We anticipate a strong pullback within the next few days.
XLM/USD
After a successful defense of $0.184, the bears have renewed their selling, pushing Stellar to new year-to-date lows.
The next level to watch on the downside is $0.08. Though we anticipate the bulls to offer some buying support at this level, it is difficult to pinpoint the bottom.
The XLM/USD pair will signal a likely bottom when it sustains above the downtrend line. We expect it to consolidate for a few days before starting a new uptrend. The traders should wait for a trend reversal before buying.
BCH/USD
Bitcoin Cash continues its journey southwards. Within three days, the price slumped from an intraday high of $157.58 on Dec. 4 to an intraday low of $104.99 on Dec. 7. Currently, the bears are trying to sustain below the psychological support of $100, while the bulls want to maintain the price in triple digits.
If the bears succeed in holding the BCH/USD pair below $100, the next support on the downside is $91.78. The RSI has fallen to about 15 levels, which shows that the selling has been overdone and a pullback can start anytime. However, the traders should wait for the decline to end before jumping in. Until then, it is best to remain on the sidelines.
BSV/USD
While the other cryptocurrencies are sliding to new lows, Bitcoin SV is bucking the trend. It is attempting to turn around and move up.
The BSV/USD pair is currently in a range of $80.352—$123.98. A break out of the range gives it a pattern target of $167.608, with a minor resistance at $150.47.
If the bears defend the overhead resistance at $123.98, the digital currency might consolidate for a few more days. Short-term traders can look for buying opportunities as long as the price stays above $80.352. As the overall sentiment is negative, we suggest traders keep the position size at about 40 percent of usual.
EOS/USD
EOS is under a strong bear attack. The fall has been so severe that the support level of $2 could not even hold for a day. The next support on the downside is $1.5257. However, with this kind of incessant selling, it is difficult to predict where the decline will end.
When the digital currency makes new lows on a daily basis, the new money sitting on the sidelines doesn’t want to come in. On the contrary, the traders who have been long since higher levels, dump their positions, as they are not able to take the losses. This vicious cycle usually ends in a capitulation.
After an extended decline, the price becomes so attractive that a few aggressive bulls start bottom fishing. We shall wait for signs of buying in the EOS/USD pair before turning positive. Until then, it is best to wait and watch.
LTC/USD
The bears have broken down of another critical support at $28. Litecoin can now slide to $20, where we expect buying to emerge.
The trend is clearly in favor of the bears, as the bulls are unable to hold the price in a range.
The bulls will try to push the price back into the range, whereas the bears will try to maintain the downward momentum. If the bulls succeed, the LTC/USD pair might consolidate for a few days, before starting a new uptrend. Traders should wait for a new buy setup to form before initiating any new positions.
TRX/USD
TRON has broken down of the immediate support of $0.01339050. Its next support is at the Nov. 25 low of $0.01089965. The moving averages are trending down, and the RSI is in the negative zone, which shows that the sellers have an upper hand.
However, we like the way the TRX/USD pair has not broken down to new year-to-date lows. This shows that the owners are not keen to sell at the current levels, and the buyers are supporting it just above the recent lows.
If the bulls defend $0.01089965, the digital currency might enter a basing formation. We shall wait for a few days for it to confirm a bottom before suggesting a trade in it.
ADA/USD
The downtrend in Cardano has resumed, as the pair makes new year-to-date lows. The next support on the downside is at $0.025954.
The falling moving averages and the RSI in the oversold zone will continue to pressure the ADA/USD pair. The first sign of a change in trend will be when the price breaks out of the 20-day EMA and the top of the tight range at $0.45624. Until then, every pullback will be sold into. We suggest traders wait for the trend to reverse before initiating any long positions.
Market data is provided by the HitBTC exchange. Charts for analysis are provided by TradingView.