Technical analysis

Will the crypto market bounce despite Coronavirus fears?

Julien Moretto – 11 Mar 2020

The cryptocurrency market has not been spared from the panic caused by the Coronavirus. It dropped sharply on Sunday. On March 11, Bitcoin is back on the €6,900 ($7,800) mark, down 12% in one week. Altcoins are also dropping, with Ethereum down 13.6% and Litecoin 22%.

Global stock markets are suffering a very sudden crash, mainly due to fears related to the Covid-19 epidemic and its effects on the global economic slowdown. For now, Bitcoin is following the same trend as the traditional markets, although the “safe haven” qualities that some people attributed to it might suggest a much stronger resistance to the current crisis.

But this situation could soon change, and the crypto market could find itself once again dissociate from the traditional markets thanks to the massive measures planned shortly by central banks, including liquidity injections in a context where global debts are hitting records. One thing is certain, the long-term investor should not, in this context, keep his eyes on the prices. This is the best way to take bad decisions and make mistakes. On the contrary, it is necessary to take a step back and use more than ever a tiered investment strategy, keeping capital to inject it on potentially interesting support levels. Let’s analyse the market.

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  • According to CoinGecko, market capitalization drops below $200 billion to $195 billion, down from $252 billion seven days ago.
  • Bitcoin is taking advantage of the stronger decline in Altcoins to reinforce its dominance: 64.3%, compared to 63.7% last week.
  • Good resistance of the Kyber Network (KNC) token which is one of the rare cryptocurrency of the top 50 in the green over one week, with +20% increase.
  • The regulation of the cryptocurrency market is accelerating throughout the world, particularly in France, with approvals for Virtual Assets Service Providers (VASP) which are expected to arrive soon. The Association ADAN (Association for the Development of Digital Assets) also held its launch event on March 6 in Paris.

We invite you to discover our Youtube Live (recorded on march 10 at 5pm, in french) :

Bitcoin (BTC)

Coinhouse’s Recommendation : 
Wait

  • Bear territory on Bitcoin. While the drop was looking like a correction until last Saturday, it accelerated on March 8. This is our scenario of a longer correction taking place. But like everyone else, we were surprised by the violence of the drop. In a few hours, the price broke the support of €7,700 ($8,500) and even the support of €7,200 ($8,000), passing in the same time under the 200-day moving average.
  • The market is entering a phase of rather irrational excess. The price seems to be stabilizing at the €6,900 ($7,800) at the beginning of this week but future declines are not to be excluded. In such a context, it is important to take a step back and not keep your eyes on the prices. If you believe that Bitcoin is an asset that holds all its promises for the future, the strategy of tiered investing remains the best in this context. You then keep capital to invest gradually in different supports.
  • The current level of €6,900 ($7,800) may already be an interesting first level, as it is a pivot that acted as a resistance in December 2019 . But it is true that the current context encourages us to remain cautious. If the price falls further, the next two levels likely to act as support are $7,300 and the December 2019 low of $6,500.
  • For the most cautious investors, we will not try to catch the low point of the market and will prefer to wait for real bullish signals in the market to come back. It is vital to go back above €7,700 ($8,500).

Ethereum (ETH)

Coinhouse’s Recommendation : 
Buy

  • Ethereum (ETH) has suffered this week: -13.6%, to fall back to €174 ($197) on March 11. Last week’s corrective downtrend is being undermined. But the support level of €180 to €183€ ($200 and $205) is not yet broken in a straightforward way.
  • Purchases can therefore still be envisaged on Ethereum, but keeping in mind that the risk is maximum here and that only part of its capital should be put in. If the whole market were to fall further, the price of Ethereum will probably go to its next support level at €165 ($180). The current drop is fueled by panic and it is impossible to predict where the movement will stop.
  • As with Bitcoin, the most prudent investors will not expose themselves to the current risk. It is more reasonable to expect signs of a stronger recovery. The price of the ether needs to move back up to the $220/$225 level.

Tezos (XTZ)

Coinhouse’s Recommendation : 
Wait

  • Tezos (XTZ) is one of the altcoins that is resisting the current downtrend the best. However, the asset is losing 9.5% this week and is now trading around €2.24 ($2.54) on 11 March.
  • Even though Tezos price is currently on the strategic 50% Fibonacci retracement level of the last rise, this level of €2.40 ($2.58) has already been crossed lower and the price is now retesting it as resistance. It is more prudent to wait for the next clear market direction before intervening on Tezos.
  • If the decline continues, the next two interesting supports for purchases are the next Fibonacci retracement level (0.618) at $2.26. Some technical projections of the current decline even show a possible low point on the $1.90 that could make sense from a technical point of view, as this is historically the highest point reached by the Tezos price in 2019.

Top & flops of the week (top 50 marketcap)


Tops

1- Kyber Network (KNC) : + 16,8%
2- WAVES : +9,4%
3- Leo Token (LEO) : +2,4%


Flops

1- Algorand (ALGO) : -26,7%
2- Bitcoin SV (BSV) ) : -22,8%
3- Ethereum Classic (ETC) : -22,5%

Latest crypto news

  • The yield on 10-year U.S. Treasuries falls below 50 basis points.
    30-year Treasuries below 1% for the first time ever. These figures indicate a loss of confidence in the U.S. economy.
    Oil drops more than 30% due to conflicts with OPEC.
    The crypto market remains under observation and does not know how to position itself in this particular and unprecedented context.
  • The Indian Supreme Court rejects a central bank circular on the prohibition of cryptocurrencies.
    The circular prevented banks from handling transactions of cryptocurrencies.
    The central bank has appealed, and the final decision will be closely watched as it will have important implications for the adoption of cryptocurrencies in India.
    A cryptocurrency market place took advantage of this a few hours after the rejection of the circular to add a bank transfer service for its customers.
  • Launch in France of the Association for the Development of Digital Assets.
    Its aim is to “accelerate the structuring of the industry, promote it to public authorities and private players and foster its development”.
    It is chaired by Simon Polrot and supported by members including ARK Ecosystem, Blockchain Partner, Coinhouse, Coinhouse Custody Services, ConsenSys France, iExec, Kaiko, Ledger, LGO, Nomadic Labs and Woorton.

Investors’ attention is drawn to the fact that the content of the articles does not constitute investment advice.
Investment in cryptocurrencies carries a risk of total capital loss.
For more information, please contact our customer support.

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