Technical analysis

Strong correction on Bitcoin and Altcoins, time to buy?

Julien Moretto – 18 Jul 2019

Significant drop on Bitcoin and the cryptocurrency market this week, similar to the one at the end of June. Bitcoin suffers with -24.65% and was trading around $9,500 (€8,500) on July 17 at noon. We have reached a buy zone starting at $9,100 (€8,100) which can be interesting for mid-term investment.

According to CoinMarketCap, market capitalisation is dropping sharply to $256 billion from $324 billion last Wednesday. Bitcoin’s dominance on the overall crypto market remains high at 66%. Volatility is impressive but volumes have remained broadly unchanged since the end of June, with an average of $25 billion traded on a daily basis on Bitcoin.

The drop is stronger on the altcoins market. Even big names such as Ethereum or Litecoin are not spared, with decreases of 32% and 30% respectively over the last seven days. Other cryptos such as Bitcoin SV (BSV) or OmiseGo (OMG) lose more than 40%. A thing to notice this week is the tweet from US President Donald Trump rather hostile to cryptocurrencies and a hearing before the US Senate concerning Facebook’s cryptocurrency Libra.

Here are the main price levels to watch out for:

Bitcoin

Bitcoin chart

Coinhouse recommendation:
Buy on targets





There was a lot of anticipation about a symmetrical triangle on Bitcoin following its last top on July 10 at $13,200, which was a bullish continuation scenario. The clear drop below the $10,000 mark on July 16 invalidates this scenario and shows that Bitcoin will retrace more deeply.

We are witnessing a three-stage corrective movement consisting of a first downward wave, a bounce, and then a second downward wave in which we are currently. Analysis of the Fibonacci extensions tends to confirm that Bitcoin is heading at least in the areas we had identified for medium to long-term investments.

These extension levels give information on the possible area that will stop the drop. Our first buy zone between $8900 and $9100 (€7950 and €8100) has already been reached. It coincides with a level that had been resistance at the end of May 2019. If we bounce in this area, its intensity will be monitored while protecting the buy entry in case of another drop which is possible.

This leads to the second buy zone, located lower between $8,200 and $8,500, also to be considered because it corresponds to the gap on the CME Futures Bitcoin contract. Any positive signal on the indicators in this area will be a buy signal. The invalidation of this scenario occurs if Bitcoin returns above $11,050 in the next few days.

Ethereum (ETH)

Ethereum chart

Coinhouse recommendation:
Buy



Hard week for Ethereum who lost 32.31% against the dollar compared to last Wednesday, and came to test the psychological level of $200 (180€). Facing Bitcoin, the situation continues to deteriorate since the break of the major support of 0.025 btc/eth. The level of 0.016 to 0.018 btc/eth could put an end to the current drop.

Against the dollar or the euro, the fall is also sudden and takes place in three stages, just like Bitcoin. Analysis of the Fibonacci extensions shows that this second wave of decline reaches between 1 and 1.618 extensions of the first wave. These levels often signal the end of a downward sequence, at least temporarily.

Buying can therefore be considered on Ethereum. But the asset could drop a little further to reach a high volume area between $160 and $ 180 ( €145 and €160). Any positive signal on the indicators in this area will represent a good buy signal. Be careful to always protect your positions on altcoins, because if Bitcoin drops more sharply, the altcoins will be carried away in a stronger decline.

Litecoin (LTC)

Litecoin chart

Coinhouse recommendation:
Buy



Litecoin was a lead bull at the beginning of 2019 but now shows similar drops to other altcoins. He is down 31.16% this week, trading at $78 (€70) on Wednesday at noon. Against Bitcoin, the loss in value is even worse, dropping 52% in one month, with the chart of Litecoin against Bitcoin back on support levels of the end of 2018.

Litecoin was a lead bull at the beginning of 2019 but now shows similar drops to other altcoins. He is down 31.16% this week, trading at $78 (€70) on Wednesday at noon. Against Bitcoin, the loss in value is even worse, dropping 52% in one month, with the chart of Litecoin against Bitcoin back on support levels of the end of 2018.

Same pattern as Ethereum against the dollar or the euro. This is a three-step drop, and Litecoin currently seems to be finishing its second wave of decline, reaching the 1.618 Fibonacci extension of the first wave. This Fibonacci extension area is located on the $80-88 (€68-75) levels and coincides with a pivotal level that acted both as a resistance in April 2019 and as a support in May.

Buying Litecoin is definitely to consider this week. The invalidation of this scenario occurs if Bitcoin continues to drop sharply and causes Litecoin to fall below $70.

Top flops of the week (top 50 marketcap)

1- Bitcoin SV (BSV) : -43,13%
2- OmiseGo (OMG) : -41,86%
3- QTUM : -41,29%

Hot crypto news of the week

During a hearing of the US Senate Banking Committee held on July 16, David Marcus, the Libra project leader on Facebook, was questioned. The senators showed their scepticism about the social network giant’s project, highlighting Facebook many flaws in the management of their customers’ data as well as the problems of centralisation of power. Indeed, although the Libra association is a coalition of actors, it is Facebook and not its partners that have control over a user base of two billion people. In addition, senators do not trust Calibra, Facebook’s subsidiary managing the Libra wallet, not to share confidential information with its parent company or the foundation.

Gary Gensler, former president of the CFTC (regulator), considers that the libra token, belonging to the same system as the “libra investment token”, is a financial security that must be regulated as such. In addition, certain aspects of Libra should also fall under banking regulations because Libra would be a form of private money that can be used as a means of payment, a store of value, or a lending system. This is similar to the products that banks can offer.

Donald Trump opened the hostilities by stating that he was “not a fan” of Bitcoin and cryptocurrencies in general, and that he did not consider it as a form of money and Bitcoin valuation is very volatile and based on “thin air”

Jerome Powell, President of the Fed, told a US Senate committee that Bitcoin was a reserve of value comparable to gold. This is the first time that a leading personality has recognized the value proposition of this asset.

Finally, Steven Mnuchin, US Treasury Secretary, expresses “very serious concerns about Libra” and insists that creators of virtual currencies “will have to apply the same anti-money laundering, anti-terrorist financing measures as traditional financial institutions”.

Investors’ attention is drawn to the fact that the content of the articles does not constitute investment advice. Investing in cryptoassets involves a risk of total capital loss. For more information, please do not hesitate to contact our support team.

Crypto prices

Name Price
bitcoin
Bitcoin (BTC)
€7,412.39
ethereum
Ethereum (ETH)
€163.48
litecoin
Litecoin (LTC)
€49.78
ripple
XRP (XRP)
€0.263
maker
Maker (MKR)
€449.47

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