Technical analysis

Bitcoin struggling below $11,000, correlated to stock markets

Julien Moretto – 7 Oct 2020

Bitcoin, and with it the entire cryptocurrency market, are coming at a pivotal moment. Nearly 3 years after the last bubble burst, all the observers involved in this ecosystem are waiting to see if a powerful bull market is going to take place on Bitcoin, as in 2013 and 2017. But we are living in very specific year 2020, marked by many uncertainties, a health crisis and an underlying economic crisis. A context that is very different from the one experienced during the two previous bull cycles. The coming months will be decisive and will reveal whether or not Bitcoin is perceived as a store of value and an asset with high potential by investors.

From a purely technical point of view, there is still a lot to do to talk about a long-term bull market. Bitcoin is losing another 2.2% this week at €9030 ($10,600). In hindsight, the asset has been trading in the $10,000 to $11,000 range for more than a month. When the price moves out of this range, it will give a first signal on the direction of the trend for the coming weeks. Another surprise, since March 2020 and the Covid-19 crisis, the price of Bitcoin has been correlated to the evolution of stock markets. We see it again today with the markets’ reaction to Donald Trump’s announcement that the negotiations on the new stimulus package will be halted. The markets fell, but so did Bitcoin. A problem for an asset that some classify as a “safe haven”. A similar price action is observed on the majority of other cryptocurrencies, not to mention the strong correction that the DeFi sector has been experiencing for the past month, with some coins losing more than 90% compared to their August high. But let’s not forget that looking at the long term, Bitcoin’s price may simply be consolidating the bounces that began in April 2019 and March 2020, before continuing this uptrend. Be patient!

  • According to CoinGecko, market capitalization is again declining to $339 billion, down from $347 billion last week.
  • Bitcoin’s dominance is almost stable at 57.9%, compared to 57.1% last week.
  • The best performance in the top 50 is to be attributed to Celsius Network (CEL) with +26.6% over one week.

We invite you to discover our analysis in video (in french and dated from October 6):

Bitcoin (BTC)

Coinhouse recommendation : 
Wait

  • As this analysis is primarily intended for investors with a medium to long-term horizon, there is unfortunately no significant change in the price of Bitcoin compared to last week. As long as the price is between €8500 and €9400 ($10,000 and $11,000), there will be big uncertainty. For those who wish to buy as soon as possible, the first thing to watch out for is when the price crosses the 50-day moving average, currently at $10,870. But the break up from the September 19 peak at €9450 ($11,200) will be a much stronger signal for buying. If uncertainty remains high, we even advise to wait for a weekly close above this level.
  • We will monitor the political and economic situation in the run-up to the US elections, considering that the correlation between the price of Bitcoin and the US stock markets remains strong. If the situation deteriorates, a return to the €8600 ($10,000) support will be a sell signal because it will have a high probability of being broken. Let’s not forget either that there is a gap on the CME Bitcoin futures contracts at $9700 (€8250). This price level may be favourable for buying depending on the technical signals observed in this zone.

Ethereum (ETH)

Coinhouse recommendation: 
Wait

  • Ethereum (ETH) is down 5.3% for the week to stand at €290 ($340) on October 7. Same scenario as for Bitcoin: The price is now trapped between the €265 ($310) support and the €316 ($390) resistance. The exit of the price from this range will be a buy or sell signal. If the exit is bullish, the first resistance to watch out for is €370 ($445). In case of a bearish trend, the probabilities will be strong to rely on the polarizing level of 245€ ($290), which will be favorable to make purchases according to technical signals.

OMG Network (OMG)

Coinhouse recommendation: 
Buy

  • OMG Network (OMG) is down 19.2% this week to €2.82 ($3.30). This decline is to be put into perspective with the very strong increase observed in assets in August. The price is currently in a favourable zone for purchases, an old resistance that the price violently broke last August. The fact of regaining ground on it is of interest to position oneself to buy and play a rebound. Beware, given the current market context, this position is for investors with a good risk tolerance. The position will have to be sold if the price falls below €2.55 ($2.90).

Tops & flops of the week (top 50 marketcap)


Tops

1- Celsius Network (CEL) : +26,6%
2- Monero (XMR) : +5,7%
3- EOS : +2%


Flops

1- Uniswap: -39,4%
2- yearn.finance (YFI) : -39,2%
3- UMA : -34,5%

In this article, all information is given for information purposes only, even if it has been established from serious and reputable sources. It does not constitute an offer by Coinhouse to buy or sell digital assets, or an offer to provide services on digital assets, nor does it constitute advice, encouragement or a recommendation to operate on the digital assets in question. It constitutes simple information over which the user retains absolute control. We inform you that if you choose to invest in digital assets, you must be aware of our general terms and conditions of sale (https://bit.ly/2FGW2ek) and accept the various risks listed and defined on our legal warning page (https://bit.ly/3c4sQKc).

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