• Bitcoin breaks higher with coronavirus
  • It has a history of breaking higher with Chinese issues
  • Cryptocurrency clears $10,000

While there is a certain amount of debate as to whether or not Bitcoin is in a huge new uptrend for the longer-term, or if it’s a short-term reaction, the reality is that Bitcoin has been moving right along with the coronavirus outbreak. In fact, Bitcoin has become a leading indicator for China-related issues.

In the past, Bitcoin has been used to get money out of mainland China quickly, ahead of issues. That is typically followed by monetary restrictions as the Chinese Communist Party limits monetary outflows from the country.

China is by far one of the most important user bases of Bitcoin in the world, as it is a way to navigate around tight communist controls

That being said, you can see a clear correlation between the beginning of the coronavirus and Bitcoin itself. That represents the Chinese trying to get money out of the country. While there are obviously other buyers, the reality is that China is by far one of the most important user bases of Bitcoin in the world, as it is a way to navigate around tight communist controls.

The last time there was a massive flow of money out of China, Bitcoin rallied significantly only to give those gains back up. This could be what’s happening next, but for the meantime, it should be noted that there have been some very significant barriers breached by Bitcoin traders, which should continue to be influential in this marketplace. With that, the technical analysis becomes more important than ever.

Technical analysis showing BTC/USD

Bitcoin six-monthly chart

The technical analysis for the market has been very bullish as of late, but it does look as if we might be getting a little overextended. Beyond that, volume has picked up during the trading session on Wednesday, which suggests that perhaps something is happening under the surface.

As the market is forming a shooting star, it does in fact suggest that perhaps a lot of profit-taking may be going on, and perhaps even fresh, new sellers. All things being equal, though, it looks as if the market is going to go back and forth, and it’s not necessarily a sign that it’s going to suddenly fall apart.

Ultimately, if the market was to break above the shooting star-shaped candle for the Wednesday session, that would be very bullish and should send Bitcoin looking towards $11,000. As things stand right now, that is the best-case scenario, perhaps after a short-term pullback.

Furthermore, the 50-day EMA has cleared above the 200-day EMA forming the so-called “golden cross,” which is a very bullish sign. Bitcoin still looks relatively strong and the impulsive candlestick from the previous session does foretell some good things.

However, the market is at a technically important level, and the whole world knows it. Because of this, there is going to be a bit of trepidation and possibly backfilling needed in order to produce any type of continuation move.

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  • Ethereum sitting at major resistance
  • Crypto sees recent breakout
  • Use Bitcoin as a secondary indicator

Ethereum has gotten lost in the shuffle when it comes to cryptocurrency markets recently, mainly because a lot of attention is being paid to Bitcoin.

However, it is lagging slightly in reaction to Bitcoin when compared to the usual trend, but it is starting to approach a very interesting technical area. Because of this, there should be a “catch-up trade” happening in this market.

 

ETH/USD 6-monthly chart

The Ethereum chart analysis

The technical analysis for Ethereum right now is very interesting considering that the market is pressing up against the $175 level. That is an area that has offered massive support and resistance in the past, and it is a fulcrum for price.

the question now is whether or not it can continue the upward momentum

Additionally, the market has just broken above the 200-day EMA, an area that causes significant resistance. With that being the case, the question now is whether or not it can continue the upward momentum.

It’s very likely that there will be a lot decided as far as the future of Ethereum in this area, with a lot of noise extending all the way to the $200 level. However, one of the easiest ways to play this market under typical conditions is to pay attention to what’s going on in the Bitcoin world.

If Bitcoin rises, as a general rule it will lift the other crypto markets right along with it. In this scenario, it offers the ability for traders to take advantage of the correlation.

In other words, if Bitcoin can break out to the upside, in theory, the Ethereum market should be able to break above this resistance barrier.

Otherwise, if the market breaks down from here, the 50-day EMA, pictured in red on the chart and currently sitting at the $154 level, could come into play as support.

The market had recently broken above a downtrend line that attracts a lot of attention. By doing so, it was the first sign that perhaps a bullish trend was starting to form. The next couple of weeks should be crucial for Ethereum, as it looks like a serious move could be on the cards.

The play may be over here

The main takeaway from this market is that, while everybody is paying attention to Bitcoin, the real play may be over here. This is because if Bitcoin can crack the $10,000 level, it should send a fresh supply of money into the cryptocurrency markets in general, and into markets such as Ethereum.

With that being the case, the market will most probably be able to easily break above the $200 level, given enough time. However, if Bitcoin rolls right over again, this market will potentially go looking towards the 50-day EMA, and possibly even look to test that downtrend line yet again.

The setup is relatively straightforward, with Bitcoin being a very important secondary indicator.

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  • Bitcoin is well above trend line
  • It breaks above previous close
  • The safe haven crypto is threatening $8800

Bitcoin markets have rallied again to kick off the week, gaining over 2% as traders continue to worry about global growth and the threat of the coronavirus.

There is a real fear in the market, and as Bitcoin has been used for safety from time to time, there is an argument to be made that the rally was a safe haven move. However, a case could be made to suggest that, perhaps, the rally was due to a technical setup to begin with.

Technical analysis stronger by the day

BTC/USD 6-month chart

The technical analysis for this pair is getting stronger by the day. The Bitcoin against the US dollar market is currently trading at the $8775 level and has broken significantly above the close from the previous session. This is a good sign, as it shows momentum is starting to pick up yet again. There are a whole host of reasons to look at this chart in a positive light, even if it is just for the time being.

momentum is starting to pick up yet again

The fact that the market is above the previous downtrend line is also a good sign, but traders should also note that the market is currently threatening the $8800 level. Previously, the $9000 level had been of significant resistance, and if the asset can break above that level, then it’s obviously a very bullish sign for the market.

The 200-day EMA underneath has been supportive, just as the 50-day EMA is starting to curl higher. If the 50-day EMA can break above the 200-day EMA, then the market is very likely to react positively to the “golden cross.”

The $9000 level will have a certain number of ramifications for the market from a psychological standpoint, but we have seen noise in that area in the past.

The market certainly looks as if it is going to threaten that area. If it can clear it, that would be a sign that it is going towards the crucial $10,000 level above, which had previously been very important.

Recent days have been bullish

It should be noted that the last couple of days have been bullish while traders around the world were fearful in general when it comes to the coronavirus, global slowdown, and the Chinese economic issue. The question now is whether or not this is money trying to escape China. That would actually be a negative for Bitcoin as it tends to act as a temporary external pressure.

The $10,000 level will be crucial, and if it can break above, it will kick off the next leg higher. Bitcoin is obviously very volatile, so these moves should not be looked at as anything other than Bitcoin being Bitcoin.

If the market were to break down below the 200-day EMA, which is currently trading at the $8225 level, it could threaten the recent uptrend observed in this market. Expect plenty of volatility, but right now it looks like the buyers are fully in control.

That being said, it is important to keep your position size in mind as this market continues to be noisy, to say the least.

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  • Bitcoin trying to break out
  • Crypto testing 200-day EMA
  • Downtrend line also being tested

Bitcoin continues to attract a lot of attention considering that the market has broken down significantly. The cryptocurrency’s market has been all over the place during the last year or so, and as a result, it has offered a lot of volatility for short-term traders.

However, Bitcoin also tends to go silent for long ranges as well. So, with that in mind, it is a matter of timing the market in order to make profits.

Technical analysis

BTC/USD chart

The Bitcoin market against the US dollar has gone back and forth during the last couple of days, as it is hanging around the 200-day EMA. This figure is obviously a significant technical indicator that people pay attention to, so there will be a lot of volatility on short-term charts.

However, if one is to play this market, it is paramount that the longer-term trend is taken into account. With that in mind, the 200-day EMA continues to cause a lot of issues.

the US dollar has been hit rather hard against certain currencies, yet Bitcoin sits still

The downtrend line will continue to influence trading as well, so that is something that needs to be paid attention to. In other words, the market needs to clear the $8500 level before it shows a significant amount of momentum to entice buyers of any significant time frame.

Because of this, signs of exhaustion will probably continue to be jumped on by short sellers. That being said, break down below the 50-day EMA, shown in red in the above chart, would open up fresh selling and show further weakness.

What is truly interesting is that the US dollar has been hit rather hard against certain currencies, yet Bitcoin sits still. The cryptocurrency has been shunned for some time, and even though there is the halving in May, it seems as if there is a serious lack of interest or demand.

This is also due to the fact that Bitcoin simply has not been adopted with any serious influence. In some Third World countries, it is in use; but as far as acting like money, it’s far too volatile to do so.

A speculative market at best

Bitcoin has become a speculative market at best. It seems that every time that it gets a nice bounce, those who own large amounts of the digital currency are more than willing to jump it off on people chasing price.

There is the argument that it is still “early days” when it comes to Bitcoin, but one of the biggest issues that traders have is that the story behind this cryptocurrency continues to change. It was once digital gold, then it was “new money.” After that, it became a play on blockchain technology, but there is no significant use for blockchain technology a decade later.

While it shows promise, Bitcoin hasn’t been adopted on a large scale. Furthermore, the very fact that it is backed by nothing is a bit ironic considering that is the biggest complaint about fiat currencies.

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  • 8% Fibonacci retracement level being tested
  • Market stuck between two major moving averages
  • Previous week formed a hammer

Bitcoin has been falling for quite some time, reaching down towards the $7200 level. Over the last couple of weeks though we have seen a bit of a pushback, which suggests that the market will continue to struggle. However, it is very likely that the market is starting to see a confluence of forces in both directions.

Technical Analysis

Bitcoin Weekly Chart

The technical analysis for Bitcoin is starting to look better than it had previously, but there are still a lot of concerns out there. The question remains not so much as to whether or not the market can bounce, but whether or not it will be a simple bounce, or an attempt to continue going higher.

To put it bluntly, Bitcoin has been a disaster for several months now.

It should be noted that the 61.8% Fibonacci retracement level will attract a certain amount of interest anyway, and clearly, over the last couple of weeks, we have stalled in the downward pressure. Having said that, the market has fallen quite far so traders will begin to look at whether or not the downtrend can continue. To put it bluntly, Bitcoin has been a disaster for several months now.

The 50 week EMA is sitting just above, and that will probably be a major resistance barrier. If we can break above the 50 week EMA, then that would be a bullish turn of events and the market could make a move towards the $10,000 level.

Alternatively, if the market were to break down below the hammer from the previous week, that could unleash a move towards the $5500 level, which is where the 200-week moving average currently resides.

All things being equal, this will continue to be an area where one would expect a lot of volatility in choppiness, but eventually, the markets will form an impressive candlestick. Once it happens, then we should get some follow-through. Keep in mind that this is the midst of the holiday season, so it’s difficult to imagine that there will be a lot of money flowing in and out of the markets. When we get to January 6, more liquidity will flow into all the markets and we will probably get our next move.

Trading going forward

Trading going forward will more than likely be somewhat quiet over the next couple of weeks, but we are most certainly in an area where a lot of traders will be paying attention to a larger move. When we get the next impulsive candlestick, in other words, one that is relatively strong in one direction or the other forms, then the market will show what it’s about to do going forward. The next couple of weeks will be difficult but we are clearly at an inflection point for the market, and although trading at the moment might be hard, we should get some clarity relatively soon.

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  • Scammers operating out of China
  • Attracted roughly $2 billion worth of investment in
  • $185 million already sold off

Bitcoin has been getting crushed as of late. There are multitudes of reasons why Bitcoin can’t find its own footing, but reports of big scams reported in China has been the currency’s latest setback. The idea of a massive Ponzi scheme won’t do any favors for the downward trend in this market.

Negative headlines

news of a massive Ponzi scheme in China has been one of the main factors for pushing Bitcoin underneath the $7000 handle.

While sentiment in the market has been negative, the news of a massive Ponzi scheme in China has been one of the main factors for pushing Bitcoin underneath the $7000 handle. There is a new group of scammers operating out of China under the name PlusToken that have attracted a billion dollars’ worth of investments. The Chinese authorities have shut this down and has already sold off $185 million of the input.

As with any other Ponzi scheme, the idea is that new money comes in and helps pay off older investors, giving the illusion of gains.

The Chinese have arrested at least six individuals a few months ago involved in this scam, and now there is an argument to be made that some of the downward pressure and large amounts of selling were actually done from this one fund. There are at least 20,000 Bitcoin still to be offloaded, so it’s very likely this will continue to pressure Bitcoin and will struggle in the long term.

 

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  • Lack of adoption of the leading crypto
  • “Death cross” can be seen
  • Longer-term downtrend expected

Bitcoin has struggled to make any real movement over the last couple of days, with it hovering just below the $7500 level. The market has been falling for a while, and there are multiple reasons for this downtrend.

BTC/USD chart

The bearish case

The bearish case for Bitcoin continues to be the most obvious one. To begin with, there’s been a lack of adoption as far as using it as a currency. Ultimately, Bitcoin is far too volatile to use as money, so it is relegated to a simple speculative play. Most businesses don’t accept Bitcoin for payment, and as a result the demand simply isn’t there other than to speculate.

Ultimately, Bitcoin is far too volatile to use as money, so it is relegated to a simple, speculative play

Beyond that, the recent shot higher over China looking to invest in blockchain has been completely wiped out. This was exacerbated by the People’s Bank of China suggesting that investors in Bitcoin should not confuse the cryptocurrency markets with blockchain itself. It’s also telling that the massive move happened over the weekend, when retail traders are active, and conditions are thin.

There is also a trend line just above. As a result, several times sellers have reacted by coming in and pushing much lower. The so-called “death cross” underneath that trendline is getting ready to happen, and this is when the 50-day EMA crosses below the 200-day EMA. This is a longer-term bearish signal as well. Furthermore, we had broken the bottom of a descending triangle above that had support just below the $10,000 level. We retested that over that weekend with the block chain research spike and have fallen gradually since then.

The trade going forward

Based upon the descending triangle, there is a measured move down to the $4800 level, and it’s very likely to reach that area. On rallies, the 200-day EMA near the $8200 level should offer resistance as well sat the first signs of exhaustion it’s likely that the sellers were returned to this market, taking advantage of what has been such a negative trend.

There will be the occasional support level underneath, as we have seen near the $7000 level but there is nothing on this chart that suggests that we can’t get down to that $4800 handle.

It’s not until the trendline gets broken above, at the $8500 level, that one can seriously consider a turnaround and perhaps some type of bullish move. With that in mind, it’s likely to be a scenario where very little can lift Bitcoin at the moment.

This comes at a time when central banks around the world are playing it loose with their monetary policy, and Bitcoin has not benefited. Because of this, it’s very likely that this downtrend in channel shape should hold, and the next couple of months should continue to see even more selling.

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  • Ripple has been in a freefall this month
  • Bitcoin not helping the situation
  • Holding above major technical level

Ripple has gotten hammered over the last month, dropping down towards the $0.20 level. This is a large, round, psychologically significant figure that should continue to be paid attention to.

This level has caused noise more than once when it comes to Ripple, and therefore it’s likely there will continue to be a lot of buying pressure in that area.

No help from crypto markets

There has been no help from the cryptocurrency markets in general as they continue to experience a lot of volatility. The market certainly requires support from Bitcoin since it tends to drive the direction of crypto in general.

That being the case, it’s likely that the likes of Ripple will continue to struggle as Bitcoin drives most of the volume. It’s the correlated markets that continue to drive crypto in its general direction.

Ripple will suffer at the hands of Bitcoin selling

There seems to be a lack of desire to own crypto. At this point, Ripple will suffer at the hands of Bitcoin selling. Ultimately, this is a market that needs a bit of good news in general. What with the Chinese threatening to crack down on a lot of cryptocurrency, and the fact that Ripple simply isn’t being adopted as widely as once thought, there’s no reason to think that rallies are to be trusted at this point.

Technical analysis

Ripple/USD chart

The technical analysis for this pair is rather dour. The hammer that formed on Monday bounced from the $0.20 level. That said, it’s still rather weak, with a string of 20 negative candles forming before the last couple of positive ones. This tells us that Ripple is still not to be trusted. It’s also likely that the 50-day EMA, currently trading at $0.266, will continue to cause a significant amount of resistance.

Signs of exhaustion in that area probably offer selling opportunities. It’s also thought that this market is not to be trusted until we break above the $0.275 level. Until then, weakness will creep in. Unfortunately, Ripple will take its cues from Bitcoin, which looks very susceptible to selling pressure in the short term.

Markets can’t go down forever, so this bounce should be thought of as a short-covering rally, and an opportunity to take advantage of what has been a very strong downtrend. Otherwise, if one were to break to the upside, the market could reach towards the $0.325 level, which is the top of the overall consolidation area that the market had been trading in.

At this point, if we were to break down below the $0.20 level, it’s hard to tell where we would end up because it would be like a trapdoor opening. With this, it’s difficult to make an argument for buying, although it does at least “look cheap”.

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  • Bitcoin bounces in thin trading
  • Major moving averages above
  • Oversold bounce likely

Bitcoin has bounced slightly over the last 36 hours after having reached very low levels. That being said, you should be very cautious of this bounce as the market has been breaking down significantly, reaching down towards the $7000 level. However, the market should have plenty of interest in that large, round, psychologically significant figure. It should also be noted that the Bitcoin market was trading in relatively thin volume, so only so much can be read into the move.

Short-term bounce

Bitcoin chart

The market has seen a bounce, but this will be short-term at best. The 200 day EMA sits just above and will continue to offer quite a bit of resistance from everything that we have seen recently. If we rally towards that area, longer-term traders will more than likely come into play. Beyond that, the 50 day EMA is starting to turn lower, and perhaps getting ready to cross below that level.

At the first signs of exhaustion, it’s likely that the sellers will come in and take over again

At this point, it could kick off a “death cross” which is a negative sign for longer-term traders. You can only read so much into the bounce, as markets can’t go in one direction forever. At the first signs of exhaustion, it’s likely that the sellers will come in and take over again.

Longer-term outlook

The longer-term outlook for Bitcoin is that we need to continue to go much lower. This is based upon moving averages, recent price action, the fact that we have made a “lower low”, and the ascending triangle above. The ascending triangle that was broken and then retested should send this market in theory down to the $4800 level. That’s an area that will attract a lot of attention, as it was previous support.

This doesn’t mean that the market is going to get there overnight, but clearly the sellers are in control of Bitcoin, as it can’t lift itself in the face of central bank easing. It’s difficult to imagine that things are going to suddenly get better.

Most of the rush into the Bitcoin was due to money flowing out of China, and now there are concerns that the Chinese Communist Party will step in and try to stem the flow of capital outflow, especially in the Bitcoin realm.

A recent statement stating that “China was going to research blockchain technology” suggests that they are going to take even more stringent steps to curb Bitcoin adoption, replacing it with something of their own.

At this point, fading rallies continue to work until there is some type of impulsive weekly candlestick with follow-through. Recently during that announcement we had seen a very bullish couple of days. But it should be noted that it was on the weekend, therefore there was no real institutional follow-through. You can in fact see that the market moved sideways, hit the downtrend line and then broke down from there. Bitcoin still looks very soft.

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  • China a major player in Bitcoin
  • Fear of government crackdown
  • Has completely reversed major bullish surge

Bitcoin’s price has plunged over the last several sessions after the surge higher it saw over the weekend. This was based on speculation that the Chinese “investing in blockchain research” would lead to higher Bitcoin pricing over the longer term, as well as greater demand.

At one point, the Bitcoin market did break above the $10,000 level. However, it should be noted that the surge higher was during the weekend, which means there is a lack of institutional volume. Retail traders tend to be a bit more impulsive and don’t have the ability to move the markets for the longer-term like they once did.

China still a major player in Bitcoin

The Chinese are still a major player when it comes to Bitcoin, with China being one of the largest places where Bitcoin has been adopted. The cryptocurrency is a vehicle that a lot of the wealthy in China use to protect capital, as sometimes the government will crack down on monetary flows.

They are starting to do that again in the wake of the political situation in Hong Kong, where Bitcoin will be thought of as one way to get finances out of the country. However, there are unsettling comments that the Chinese may choose to crack down on the crypto market.

Keep in mind that a lot of the bullish momentum to the upside was due to comments from President Xi suggesting that the Chinese would speed up blockchain research. It should be noted, though, that the People’s Bank of China has since warned investors not to confuse the technology with the idea of owning cryptocurrencies something that a lot of retail traders tend to miss.

Selling off below initial rise shows Bitcoin’s weakness

Bitcoin seems to be suffering from all sides. Selling off above the impulsive move from President Xi’s comments and then falling below them shows just how weak the demand for the crypto is at the moment.

One of the biggest problems we continue to experience is that Bitcoin isn’t stable enough to be widely adopted for payment. At this point, it is simply a speculative investment. Speculative investments tend to be rather difficult to deal with, and they most certainly can’t be used for money as they aren’t stable enough.

This moment presents a double-edged sword. Bitcoin can be attractive for those looking to speculate and make quick profits, but it’s absolutely impossible for retailers or corporations to use it with any type of certainty.

Bitcoin will not be money

One day, Bitcoin could be trading at $9000, only to turn around and drop to $7000. As long as that’s the case, Bitcoin will not be money. This is becoming more apparent to the overall markets.

Furthermore, the US dollar continues to strengthen, which of course is working against the value of Bitcoin as well.

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