Technical analysis

Bitcoin about to confirm a long-term bullish reversal

Julien Moretto – 29 Jan 2020

The uptrend seems to be confirmed in the cryptocurrency market. Bitcoin is up another 7% in the last seven days. More importantly, the price is now in contact with the €8,400 to €8,550 ($9,200 to $9,400) pivot zone. Even if other technical resistances are higher, the breakout of this range will trigger a long-term bullish sentiment in the market.

On the altcoins side, the top 20 of the market is dominated by Ethereum Classic (ETC) and Cardano (ADA), which gained 36.2% and 21.8% respectively this week. With the news showing concerns about the coronavirus, some people are questionning whether Bitcoin should be classified as a risky asset or a store of value. We observed that since the coronavirus is making the news, Bitcoin has been on the rise while stock market indexes have corrected significantly. An observation that suggests that Bitcoin is uncorrelated to the stock markets. Here is our analysis.

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  • According to CoinGecko, the market’s capitalisation is up sharply, $256 billion compared to $240 billion last week.
  • Bitcoin dominance rises to 66.5%, up from 65.7% last week
  • The two best performances of the week in the top 20 are Ethereum Classic (ETC) with +36.2% and Cardano (ADA) with +21.8%. Bitcoin Cash (BCH) also continues its uptrend with +13%.
  • The Bitcoin protocol is preparing its most important evolution in the last 3 years. The developers are working on the Schnorr signatures and the Taproot tool.

We invite you to discover our complete analysis in video (in french and dated from January 28):

Bitcoin (BTC)

Coinhouse’s recommendation : 
Profit taking to come

  • Our recommendation changes slightly this week. For sure, the resistance around €8,400 ($9,200) is expected to be broken completely in the next few days, triggering a long-term bullish sentiment in the market. But for those who wish to optimise their investments, we will soon reach other areas of potential resistance that justify some profit taking.
  • Fibonacci extension projections (between 0.618 and 1) give us a large area between €8,800 and €9,400 ($9,700 and $10,500). The price is likely to face resistance at these levels. If buying strength remains moderate, €8,800 ($9,700) should act as a resistance. If the RSI starts to fall again and volumes drop around this level, then profit taking should be a good strategy.
  • If the market gets a little more bullish, then the price should move towards the $10,000 psychological level, and even until the area around €9,400 ($10,500). This level has already caused a strong sell reaction in October 2019. Profit taking should then be envisaged on this level.
  • If this scenario takes place, we will first be patient and wait for some correction and consolidation. If the price then drops back to the €8,400 ($9,200) pivot zone, buybacks will be particularly interesting, if signals are positive on the main indicators.
  • As we indicated last week, this uptrend will have to be accompanied by the RSI frequently in the overbought zone in the daily timeframe to be confirmed long-term.

Ethereum (ETH)

Coinhouse’s recommendation : 
Wait

  • Ethereum is less performant than Bitcoin this week: +5% in 7 days, at €159 ($175) on January 29.
  • We wait once again this week. We would like to see more strength from the buyers before to buy. Our buy signal will only be valid if the chart breaks the key level of €165 ($180), with some volumes.
  • Ideally, the breakup of this resistance should be accompanied by the installation of the RSI indicator in the overbought zone on the daily timeframe.

Litecoin (LTC)

Coinhouse’s recommendation : 
Buy on break

  • It’s also a good week for Litecoin, gaining 6,5%, to settle around €55 ($60) on January 29.
  • Litecoin had been slightly off the radar for a few weeks, because of its sharp decline since June 2019 and the absence of clear signals of long-term reversal. But this situation could quickly change.
  • The price is currently back on the €55 to €57 ($62 to $65) pivot zone which has served both as a support and a resistance in the past. A bull break of the €57 ($65) will be a buy signal on Litecoin.
  • The pivot levels are pretty clear on Litecoin. If the price continues to rise, the next area of resistance is likely to be in the €70 ($78) range. Profit taking can then be expected at this level.
  • The MACD and RSI indicators are showing bullish signals in the daily timeframe. The MACD is about to make another bull cross and the RSI is about to go back to the overbought zone, confirming strong buy pressure.

Top & flops of the week (top 50 marketcap)


Tops

1- Ethereum Classic (ETC) : +38,2%
2- Cardano (ADA) : +22,8%
3- Bitcoin Cash (BCH): +13,9%


Flops

1- Bitcoin SV (BSV): -7%
2- 0x (ZRX) : -4,6%
3- Cosmos (ATOM): -1,9%

Hot crypto news

  • A 12.5% tax on Bitcoin Cash mining is proposed by the miners. This tax would be levied on the amount generated by each block in order to finance the development of the protocol. The tax would be placed in a fund in Hong Kong, of which the administrator is not  known yet. Many members of the Bitcoin Cash community see this proposal as an arbitrary takeover by a cartel of miners.
  • Ripple plans to go public in the next 12 months. Its CEO is looking forward to the final fundraising in 2019, to the tune of $200 million. The company is now valued at $10 billion. To finance itself, it has also sold $1.22 billion worth of XRP from its reserves since 2016.
  • The SEC warns against IEOs. It warns that these fund-raisers do not offer sufficient guarantees, as the exchanges that support them do not provide sufficient security. It warns that even IEOs organised outside the United States could be affected by sanction
  • The Davos Forum is very interested in cryptocurrencies. A lot of discussion has taken place this year around this topic and the blockchain. Among the decisions, a consortium for the governance of digital currencies was created. There has also been a lot of discussion about the central bank digital currencies (CBDC), which are being discussed in many countries.

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 further information, please do not hesitate to contact our support department.

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