Reports that Goldman Sachs had scrapped plans for a crypto trading desk sent markets tumbling earlier this week, but is there a trend change in sight?
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Market data is provided by the HitBTC exchange.
Total crypto market capitalization tumbled from $239 billion on September 5 to $200 billion on September 6, according to data from CoinMarketCap. One of the probable triggers for the fall was a Business Insider report that Goldman Sachs was dumping its plans to launch a cryptocurrency trading desk.
On September 6, Goldman Sachs Chief Financial Officer Martin Chavez called the news as “fake.” He clarified that the investment bank is still working on a type of derivative for Bitcoin. Though this news stabilized markets, it did not result in a sharp price recovery. This shows that the bulls are cautious, following frequent failed attempts to start a new uptrend.
Coinbase crypto exchange has said that it is exploring the option of creating a cryptocurrency-based exchange-traded fund (ETF) with the help of BlackRock. While institutional players are considering entering this space, retail investors are losing interest as cryptocurrencies plunge to new lows.
In a recent survey by YouGov Omnibus, 49 percent of respondents were glad they had not purchased Bitcoin, while 15 percent wish they had purchased Bitcoin earlier, but believe it already too late to invest. Only a few respondents have any plans to buy Bitcoin in the near future. This shows that sentiment is largely bearish among retail investors and might be a contrarian signal of a bottom formation in the near future.
Do any cryptocurrencies show signs of a change in trend? Let’s find out.
Bitcoin hit our suggested stops on long positions at the breakeven on September 5. The cryptocurrency has formed a series of lower highs in 2018, shown as ellipse on the chart. Joining all the turning points forms a bearish descending triangle pattern, that will complete on a breakdown and close below $5,900.
Another bearish pattern that is setting up is the head and shoulders, which will also complete on a breakdown below $5,900. So, the key level to watch on the downside is the support zone of $5,900–$6,075.04, which has held on four previous occasions this year.
If the bulls hold the support zone, the BTC/USD pair will make another attempt to form a higher high and start a new uptrend. The first sign of strength will be a break out above the downtrend line of the triangle and the right shoulder. The failure of a bearish pattern is a bullish sign. The bullish trend will further be confirmed on a rally above $8,566.4.
On the other hand, if the bears sustain below the $5,900 level, a drop to $5,450 and thereafter to $5,000 is possible.
We shall wait for the virtual currency to show some strength before suggesting any long positions.
Ethereum is in a firm bear grip with both moving averages trending down and the RSI in the oversold territory. The bulls are trying to defend the psychological level of $200 but are unable to push prices higher.
A break below the September 6 lows will increase the probability of a fall to the pattern target of $192.93.
After the recent breakdowns, we believe that the ETH/USD pair will have to undergo a long bottoming process before a new uptrend starts. Traders should wait for the decline to end and a new bullish pattern to form before attempting a buy.
Ripple fell to a low of $0.26801 on September 6 where some buying emerged, but every small rise is facing selling pressure. A break of the $0.24508–$0.27 support zone will resume the downtrend and push prices to the next support level at $0.24001.
Both moving averages are sloping down, which shows that the sellers still have the upper hand.
If the XRP/USD pair scales above $0.37390, it will indicate that buying interest is returning. A breakout above the downtrend line might start a new uptrend. Traders should wait for a new buy setup to form before initiating any long positions.
The bulls defended the critical support of $473.9060 on September 6 but are facing selling at the $529 mark. If support breaks, Bitcoin Cash could plunge to $400.
If the support holds, the BCH/USD pair will again attempt to break out of the moving averages. We will turn positive if the bulls sustain above the $670 mark. Until then, traders should avoid bottom fishing at lower levels.
EOS broke below the $5.65 support and the trendline on September 5. The recovery attempt is currently facing resistance at the trendline.
If the bulls fail to defend the support zone of $4.50–$4.80, the EOS/USD pair can retest the August 14 low of $4.1778.
Any pullback from the current level will gain strength only if bulls sustain above $5.65. Traders can hold their remaining long positions with the stop loss at $4. If the virtual currency fails to climb above $5.65 within the next couple of days, we might suggest closing the position.
Stellar continues to trade inside the range of $0.184–$0.24987525, however, the pressure to the downside has increased. Both moving averages have turned down, after remaining flat for the past few days. The RSI has also dipped into negative territory. These signs point to the possibility of an attempt by bears to break down of the range.
If the bears succeed, the XLM/USD pair will complete a bearish descending triangle pattern, and drop to $0.11812475 and lower.
On the other hand, if bulls hold the supports, the virtual currency might spend a few more days inside the range. Traders should wait for a breakout of the range before initiating any long positions.
The recovery attempt in Litecoin met with strong resistance at the downtrend line and the 50-day SMA. On the downside, the 20-day EMA and $62.319 failed to provide any support.
As both moving averages have turned down and the RSI is also in the negative territory, probability of a fall to the August 14 low of $49.466 has increased. If this level breaks, the next stop is $44.
The LTC/USD pair will seem stronger if it breaks out of the 50-day SMA. Until then, traders should remain on the sidelines.
Cardano has been trading inside a range for the past 24 days. A break down will resume the downtrend, with a pattern target of $0.054541. The down sloping moving averages and the RSI in negative territory show that the path of least resistance is to the downside.
However, if bulls hold the bottom of the range, the ADA/USD pair might extend its consolidation for a few more days. The first sign of strength will be a breakout of the resistance zone of $0.111843–$0.13.
We will wait for the trend to change and a new buy setup to form before recommending any trades.
IOTA is threatening to go below $0.5750, after staying above it for the past two days. A break of this support can result in a retest of the August 14 low of $0.4037. If this support also gives way, the slide could extend to $0.3350.
The 20-day EMA is turning down and the RSI is back in negative territory, showing that sellers are in control. A breakout of the overhead resistance zone between the 50-day SMA and $0.9150 will indicate a change in trend.
We suggest traders hold on to their long positions with the stops at $0.46. If the IOTA/USD pair struggles to recover within the next couple of days, we might recommend closing the remaining position.
Bulls have been attempting to support Monero at the moving averages for the past two days but have not been able to push prices higher.
A breakdown from the $109.22 level can result in a fall to the trendline, which may offer minor support. If the trendline support breaks, the XMR/USD pair could retest the $81 level.
A strong bounce from current levels will indicate demand at lower levels. The virtual currency will confirm a change in trend if it sustains above $150 for three days. As the first support level has held, we recommend traders hold their long positions with the stop loss at $90.
Market data is provided by the HitBTC exchange. The charts for analysis are provided by TradingView.