Technical analysis

Bitcoin’s rise in early 2020, trap or real reversal?

Julien Moretto – 8 Jan 2020

The cryptocurrency market does not start 2020 as it ended 2019. Since January 3, all the cryptos have been on the rise. Bitcoin has gained 16% over the last seven days and is approaching a key resistance at €7,700 ($8,500). Ethereum jumps 12% in one week. In the market top 20 , assets such as Bitcoin Cash or Dash respectively gained 20% and 35% in a few days. Short term, the market has clearly recovered. From a medium/long term perspective, significant resistances remains to be broken. The price will have to maintain above key levels. In this article, we analyse which indicators could give signals confirming a long-term bullish reversal:

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  • According to CoinGecko, market capitalisation is exploding, at $218 billion, up from around $155 billion on December 20.
  • The Bitcoin dominance continues to grow, at 69.2%, compared to about 66% in December 2019.
  • Good performances from Bitcoin Cash (BCH) with +20% over the week. The “privacy-based” cryptocurrencies are also on a strong rise: Monero (XMR) is at +30%, Dash at +35%.
  • This bullish recovery comes at a time when international tensions are rising sharply, with the risk of a war between the United States and Iran. It is impossible to demonstrate that these events are the main reason for this Bitcoin bounce, but the timing remains intriguing. In such a context, volatility can get out of control and technical levels may no longer react.

We invite you to discover our complete analysis in video (in french and dated from January 7):

Bitcoin (BTC)

Coinhouse recommendation: 
Buy

  • The break of the €7,100 ($7,900) level gave us our short-term buy signal. The price had been trending well since January 3, when a bullish engulfing had been observed on the daily timeframe.
  • All eyes are now on the €7,700 ($8,500) zone. It is likely that sellers will defend this zone. First, it is a horizontal resistance that rejected the price in October 2019. Then, the upper resistance of the downtrend channel in which Bitcoin has been trading since June 2019 is now at €7,700 ($8,500). Finally, if we remain in a corrective bounce pattern before a further drop, the $8,500 correspond to the Fibonacci extension zone between 1.237 and 1.618, an area often favoured by sellers to regain control after a technical bounce.
  • For those who bought Bitcoin on lower levels, profit-taking can be envisaged on the €7,700 ($8,500) level.
  • If the €7,700 ($8,500) area clearly rejects the price, then it will continue to evolve in the downtrend channel for at least the next few days. A pullback to the €7,100 ($7,900) or even the $7200/$7500 pivot is likely. Depending on the indicators as the price approaches these targets, buybacks will be considered.
  • The RSI and MACD indicators show a buying force on the daily timeframe. There are currently no sell signal on higher timeframes. Furthermore, we are not seeing any increase in volumes.
  • The current geopolitical context can lead to volatility and unexpected price reactions. If the €7,700 ($8,500) resistance is broken, the price of Bitcoin will quickly move towards the €8,200 ($9,000) zone.

Ethereum (ETH)

Coinhouse recommendation: 
Wait

  • Ethereum is also recovering nicely this week: +12%, at €129 ($144) on January 8. The asset has even gained 24% since its low of December 18, 2019.
  • These increases are still to be put into perspective, and we still recommend to wait before buying Ethereum, at least until Bitcoin has broken its €7,700 ($8,500) resistance. Some early buys can be tried, but keeping in mind that it could be another technical bounce before a beartrend continuation, as Ethereum has not yet reversed its trend on the daily timeframe (forming higher lows and higher highs).
  • For the most cautious, the best is to wait for buyers to show their strength over time. The really interesting buy signal remains a bullish break of the €160 ($180) zone with volumes.
  • A first positive signal short term would be the price reintegration of the price pivot zone between €145 and €160 ($160 to $180) and then a consolidation within this zone.

Ripple (XRP)

Coinhouse recommendation: 
Wait

  • Ripple (XRP) takes advantage of the positive market sentiment and gains 11% in one week to stand at $0.19 ($0.21) on January 8.
  • XRP experienced a significant uptrend day on January 6. A price action that had not occurred since May 2019.
  • A rise that can only be confirmed short term for the moment. Indeed, Ripple suffered a drop of around 60% between the end of June and mid-December 2019. Overall, the asset has been in a long-term downtrend since January 2018.
  • Is Ripple finally turning the tide? It is still too early to say. The Fibonacci retracements of the last beartrend (June to December 2019) show that the price still has some way to go up to reverse the trend. The 0.5 Fibonacci retracement is on the €0.30 ($0.33) level, which corresponds to the last price rejection zones that took place in late September and early November.
  • So we are still waiting before buying some Ripple. Only if the asset returns to the $0.33 zone will we resume a more active watch. A break of the last low of $0.17 would result in XRP droping back to the $0.15 multi-year support.

Top & flops of the week (top 50 marketcap)


Tops

1- DASH : +33,5%
2- Chainlink (LINK) : +32,6%
3- Monero (XMR) : +30,7%


Flops

1- Cosmos (ATOM): -1,4%
2- Tezos (XTZ) : +3,5%
3- VeChain (VET): +3,6%

Hot crypto news

Baidu launches its cryptocurrency
China’s leading search engine is entering the market.
The Xuperchain technology will be a centralized blockchain, with a network composed of masternodes.
The idea is to create a system similar to Ethereum, with smart contracts.


We continue in China with Tencent, which is also exploring the subject.
This giant is already taking a keen interest in the applications of blockchain technology.
It is now going one step further by setting up a research team to explore the use cases of cryptoassets in general.
Tencent is the company that owns WeChat and its payment solution WeChat Pay.
We are talking about more than a billion users.

No, Telegram’s TON wallet will not be integrated into the messaging application.
In that case, what is the purpose of the token in question?
We don’t know yet, but Telegram reminds holders that it gives no claim whatsoever in the company equity nor rights to dividends or voting power, and that holders should not expect the Grams to make them rich.
All this to escape the SEC (Securities and Exchange Commission), which has launched a lawsuit against Telegram last October for selling unregistered securities, and has just asked the company to disclose the contents of its bank accounts.

Google is globally hostile to cryptoassets.
Recently, the Metamask wallet was banned on the Google Play store.
Previously, the Youtube platform had started deleting all videos related to cryptocurrencies and blockchain technologies.
And a few months ago, all advertising for services related to cryptoassets were banned.
All these bans have been lifted, but leave the impression of surveillance and mistrust of these services on the part of Google.
Google co-founder Sergey Brin recently said that “Google is not at the cutting edge of blockchain technologies”.

EY develops solutions around Ethereum
The company is working on a second level layer called Nightfall.
This secondary network uses Zero-Knowledge Proofs to give confidentiality to company data in public blockchain networks.
It considers private blockchains to be a dead end.

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

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