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The market data is provided by the HitBTC exchange.
While 2017 was a raging bull market in cryptocurrencies, 2018 turned out to be a massive bear market that wiped out more than $720 billion in total crypto market capitalization. We believe that 2019 will bring back the focus on the fundamentals and the true potential of virtual currencies.
With the arrival of traditional investors, digital currencies will at times behave similar to the traditional markets. The Wall Street Journal recently pointed out that the correlation between Bitcoin trading and gold reached as high as 0.84 over a short period of time. Similarly, it has traded at a 0.77 correlation to the Chicago Board of Options Exchange’s Volatility Index (VIX).
As the market matures, it will carve out a niche for itself. We believe that cryptocurrencies are currently in a bottoming process and might signal a bottom within the next few weeks.
ETH/USD
After surrendering its position as the top altcoin to Ripple (XRP) a few weeks ago, Ethereum (ETH) is attempting a comeback. It has made giant strides last week and has emerged as the top performer among the major cryptocurrencies.
BitMEX CEO Arthur Hayes believes that the dead ICO market will spring back into action next year and will prove to be positive for Ethereum. He expects the cryptocurrency to rise to $200. Some are hoping that the network will get a boost from the upcoming Constantinople upgrade. However, it is always difficult to predict the market’s reaction to such a major event.
The long-term trend in Ethereum is down. It has lost a lot of money for its investors this year. However, after the fall, can the ETH/USD pair start a new uptrend in 2019?
After every rise and after every fall, the digital currency has a tendency to consolidate in a range. We have highlighted these periods with ellipses on our chart. In 2018, all the ranges have resolved to the downside.
Currently, the bulls are attempting a pullback after hitting a low of $83. The support line of the former range will now act as a stiff resistance. Because of that, we anticipate selling close to $167.32. If the bears succeed in defending this level, a range bound trading action might ensue.
On the other hand, if the bulls climb above $167.32, a rally to $249.93 is probable. The traders can wait for a close above $167.32 to establish long positions with a close stop loss.
Our neutral-to-bullish view will be invalidated if the price turns down and sinks below $83. We shall confirm the start of a long-term uptrend if the pair forms a large basing pattern and then breaks out of it. Until then, the traders should aim for small targets and book profits periodically.
ETC/USD
Ethereum Classic (ETC) turned out to be the second-best performer among the top cryptocurrencies. The market participants are bullish on the upcoming cohort slated for Jan. 14. 11 startups have been selected to get access to the shared office space, developer support and funding. Can the bull run continue? Let’s find out.
The long-term trend in the ETC/USD pair is down. Currently, the bulls are attempting to break out of the downtrend line that has capped all recovery attempts since May of this year.
A break out of the downtrend line will be the first indication that the momentum on the downside is waning. It can result in a rally to the next overhead resistance…