Hi traders, let's look at the Bitcoin (BTC) and Ether (ETH) markets.
The price of Bitcoin dumped over 4% yesterday and is now back into what we believe is the next market cycle's accumulation range.
This is based on the structure of the market today...
...and back in 2015.
Shorts spiked on this occasion and we expect them to pile back up into what we dubbed the "short squeeze zone" and get rejected there.
The X-factor could now be coming from the broader market, the S&P500 dumped 5.4% yesterday with surprising synchronicity with the Bitcoin market.
For all this talk about Bitcoin being uncorrelated to any other asset, this property was due to exceptional (abnormal?) bullish conditions in the crypto market itself.
What is clear is that Bitcoin did not show the spike that propelled gold when the S&P tanked yesterday.
Thus it remains to be seen if this assumption of Bitcoin being a non-correlated refuge market would hold true in a broader bearish market or if (as risk capital) it would end up being pulled out first in case of a financial crisis.
Ether (like most large and mid-cap crypto-currencies) still shows complete correlation to the price of Bitcoin.
But could be in the process of forming a double bottom.
From a technical point of view, Ether is slave to Bitcoin and will not double bottom without its blessing.
From a fundamental point of view, the upcoming DevCon IV this October...
...followed by the announcement of Joe Lubin as the keynote speaker at the SXSW festival in Texas next March
... are likely to create some positive buzz for Ethereum and could give some well needed price boost to Ether.
- We're keeping an eye on the equity market for signs of correlations.
- Shorting the Bitcoin market will become an option only if for whatever reason $6000 USD is broken below with volume then successfully retested as resistance.
- In the meantime we're not trading these chops and have no reason to believe that this last dump will necessarily trigger a break down from market structure below $6000.
What is your strategy traders?
Until next time,
This content is for informational purposes only and does not constitute financial advice.