The Crypto Daily – Movers and Shakers -29/05/20

Bitcoin rallied by 4.11% on Thursday. Following on from a 4.12% breakout on Wednesday, Bitcoin ended the day at $9,589.3.

A mixed start to the day saw Bitcoin fall to a mid-morning intraday low $9,118.2 before making a move.

Steering clear of the first major support level at $8,946.67, Bitcoin rallied to a final hour intraday high $9,630.3.

Bitcoin broke through the first major resistance level at $9,349.47 and second major resistance level at $9,488.63 before easing back.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from the 62% FIB of $10,034 to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was also a bullish day for the majors on Thursday.

Cardano’s ADA surged by 17.71% to lead the way.

Binance Coin (+3.64%), Bitcoin Cash ABC (+3.34%), Ethereum (+5.77%), Monero’s XMR (+4.28%), Stellar’s Lumen (+4.92%), Tezos (+4.37%), and Tron’s TRX (+3.12%) also found strong support.

Bitcoin Cash SV (+1.17%), EOS (+1.67%), Litecoin (+2.05%), and Ripple’s XRP (+1.37%) trailed the front runners.

In the current week, the crypto total market cap fell to an early Monday low $238.04bn before rising to an early Friday high $263.53bn. At the time of writing, the total market cap stood at $261.58bn.

Bitcoin’s dominance fell to a Monday low 66.38% before a Thursday 69.54% spike. At the time of writing, Bitcoin’s dominance stood at 66.99%.

This Morning

At the time of writing, Bitcoin was down by 0.57% to $9,535.0. A mixed start to the day saw Bitcoin rise to an early morning high $9,618.8 before falling to a low $9,483.5.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Cardano’s ADA joined Bitcoin in the red, with a 0.46% loss at the time of writing.

It was a bullish start to the day for the rest of the pack, however.

EOS led the way early on, rallying by 1.49%.

BTC/USD 29/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid sub-$9,450 levels to bring the first major resistance level at $9,773.67 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from Thursday’s high $9,630.3.

Barring an extended crypto rally, the first major resistance level would likely limit any upside.

In the event of another extended crypto rally, the second major resistance level at $9,958.03 and the 62% FIB of $10,034 would likely come into play.

Failure to avoid sub-$9,450 levels could see Bitcoin fall deeper into the red.

A fall back through the morning low to sub-$9,450 levels would bring the first major support level at $9,261.57 into play.

Barring another extended crypto sell-off, however, Bitcoin should steer well clear of the second major support level at $8,933.83.

 Gold – Patience Is A Virtue

Anybody who missed this rally might now be under stress since governments and central bankers are doing everything to destroy the purchasing power of this hard- earned currency which is sitting in the bank account paying no interest. Gold has done a good job to protect its holders. However, blindly chasing any asset that is in an uptrend is not a good strategy. The key is always to wait for pullbacks and dips so that one can buy low instead of high. Gold – Patience is A Virtue.

Review

Looking back, my last two Gold analyses on March 15th and April 19th were partly a little too pessimistic. Although there was indeed a brutal sell-off down to US$1,450 on March 20th, the unprecedented expansion of the money supply by almost all central banks worldwide then quickly caused gold prices to rally towards US$1,747 within the following four weeks. Since this high point on April 14th, gold prices over all have traded sideways between US$1,660 and US$1,765. Thus, there wasn’t any deep pullback!

However, gold prices haven’t run away either. On the contrary, it must be noted that despite the corona crash and liquidity flooding, gold basically has not made much progress since its first interim high at US$1,689 on 24th of February. Currently, with spot gold trading slightly below US$1,710 prices are up less than US$20 since end of February!

In Euro terms, the results do look somewhat better. Here prices have just recently reached a new seven-year high at EUR1,632 in the past trading week and have also been in a flat up-trend over the last few weeks.

All in all, the price of gold has thus been stagnant for nearly eight weeks.

Technical Analysis: Gold in US-Dollars

Gold in US-Dollar, weekly chart as of May 26th, 2020. Source: Tradingview
Gold in US-Dollar, weekly chart as of May 26th, 2020. Source: Tradingview

On the weekly chart, gold bulls continue to strive to finally leave the uptrend channel that began in August 2018 behind them. So far, they have not yet succeeded in doing so. Should the bulls now run out of steam or do need a breather, a quick pullback towards the mid of the trend channel would be very likely. However, despite weeks of consolidation at a high levels, there is still no sign of exhaustion. But one could speak of a “dwindling bullish momentum”.

It is noticeable that since the beginning of the year gold has been moving primarily in the zone between the 61.8% fibonacci retracements (US$1,586) and the 78.6% fibonacci retracements (US$1,733). These fibonacci retracements relate to the major correction in the gold market when prices fell from US$1,920 down to US$1,045 between 2011 and 2015. Since the final low in December 2015, the bulls have now recovered 61.8% and 78.6% of the lost distance.

Hence, the zone between US$1,586 and US$1,733 is the last place of refuge for the gold bears. If this last bastion can be sustainably conquered, the way to the all-time high at US$1,920 and prices above US$2,000 would be clear. From this perspective alone, the confusing back and forth over the last few weeks is therefore not surprising. At the same time the bears obviously do not (yet) have enough strength to wrest larger space from the bulls here.

However, the stochastic oscillator does not look good on the weekly chart. Both lines are still bullishly embedded above 80, but as soon as the momentum starts to turn, the strongly overbought position immediately will kick in and deliver a sell-signal. in that case a multi-weeks to multi-months corrective phase becomes extremely likely.

All in all, gold prices have been treading water for weeks now and seem to be slightly stuck above US$1,700. However, a trend reversal has not happened. Ideally, the slightly disjointed picture will dissolve with a healthy but overall manageable pullback in the summer months.

Gold in US-Dollar, daily chart as of May 26th, 2020. Source: Tradingview, Patience Is A Virtue
Gold in US-Dollar, daily chart as of May 26th, 2020. Source: Tradingview, Patience Is A Virtue

On the daily chart, the bulls managed to break out of the five-week consolidation triangle on May 14. With the following spike towards US$1,765 they immediately made it clear who is in charge. In the meantime, however, this actually bullish breakout has already come to an end without any sustained gains, as prices have been falling rather rapidly from US$1,765 down to US$1,698.

Now bulls will have to answer with a bounce and a compelling recovery. However, prices above US$1,730/1,735 might already cause difficulties. Nevertheless, the chances of another wave up into the range between US$1,745 and US$1,765 are pretty good. Especially as the stochastic oscillator he has cooled down considerably on the daily chart and move in the neutral zone. This setup would once again provide enough room for another bullish run.

Furthermore, the silver price, which had just begun to move two weeks ago, does not appear to have reached the end of its rally yet. Rather, silver could pull the price of gold up again for the next few weeks.

In summary, the daily chart is neutral after weeks of consolidation. Similar to last spring and last autumn, gold prices managed to work off the heavily overbought situation without major losses but only with mild declines. Thus, at least in the short term, there is once again the chance of a rise towards the highs of US$1,765 on the chart. Even a new high at US$1,800 can not be ruled out.

A commitment of Traders: Gold

Commitment of Traders for Gold as of May 19th, 2020. Source:CoT Price Charts
Commitment of Traders for Gold as of May 19th, 2020. Source:CoT Price Charts

Since the breakout above the multi-year resistance zone at US$1,350/1,375 in May 2019, the situation in the gold futures market has been extremely overstretched and completely unhealthy. With the temporary crash in mid-March, the pent-up pressure was at least partially released, with commercial hedgers covering part of their exorbitantly large short position.

At the same time, however, the supply and demand shock caused by the corona crisis caused even greater difficulties for the paper jugglers on the COMEX. Short-term pullbacks of US$50 can apparently still be arranged somehow, but much lower prices below US$1,500 are not in sight. However, the commercial hedgers would need these prices to profitably cover their cumulative short position of currently 290,174 contracts.

Commitment of Traders for Gold as of May 23rd, 2020. Source: Sentimentrader, Patience Is A Virtue
Commitment of Traders for Gold as of May 23rd, 2020. Source: Sentimentrader, Patience Is A Virtue

Overall the CoT-report continues to provide a clear sell-signal for the gold price. A promising contrarian bottleneck is far away and would be present at the earliest with the cumulative short position reaching levels below 100,000 contracts.

The development in the silver futures market is positive, however. Here the professional players have used the crash down to US$11.60 to cover their short position. From the CoT perspective silver should no longer be threatened by another major pullback.

Sentiment: Gold – Patience Is A Virtue

Sentiment Optix for Gold as of May 23rd, 2020. Source: Sentimentrader
Sentiment Optix for Gold as of May 23rd, 2020. Source: Sentimentrader

The Optix sentiment barometer for the gold price continues to provide significantly high levels of optimism among market participants. Although the pullback over the last few days has certainly caused a decrease in euphoria, the overall consensus is still clearly in favour of further rising gold prices.

Rarely, however, do markets simply move straight up. Rather, they have to use twists and turns to make sure that the masses do not fully participate in the price increases. In order to refresh the so-called “wall of worry”, a pullback towards US$1,650 or 1,600 would probably suffice.

In summary, the Gold Optix continues to urge caution. Only when mistrust and possibly even panic and fear spread at least to some extent among gold investors, will there be meaningful and contrarian entry opportunity again. Other than that, patience is a virtue.

Seasonality: Gold – Patience Is A Virtue

Seasonality for Gold as of May 23rd, 2020. Source: Seasonax
Seasonality for Gold as of May 23rd, 2020. Source: Seasonax

For the next five to ten weeks the seasonal pattern is not supporting rising gold prices. Typically, June is the month of pullbacks in the gold market, which usually bottom out in July or mid August at the latest. Should a similar pattern occur this year, a good buying opportunity would present itself. By the way, these summer lows often also marked the low for the year.

Seasonality for Gold in US-Election Years as of May 27th, 2020. Source: Seasonax

This year however, the U.S. presidential elections, which are scheduled for November 3rd, must also be taken into account. This event should determine the second half of the year for financial markets in general. The American central bank FED will certainly do everything possible to prevent the markets from collapsing before these elections.

The further expansion of the money supply necessary for this should certainly support precious metal prices on the one hand. On the other hand, however, there is also a statistical pattern which indicates potential difficulties for gold in the second half of the year. In front of the last U.S. presidential election in 2016, gold had gotten stuck around US$1,350 to 1,375 in the summer months and then corrected down to US$1,123 by mid-December.

In conclusion, the seasonal outlook currently recommends a patient and wait-and-see stance. Should there be a pullback within the next two months, it would be a good buying opportunity. If, on the other hand, prices remain stable around and above US$1,700 in June and July, the danger increases that the unfavorable U.S. election cycle will start to affect gold from late summer.

Bitcoin/Gold-Ratio

Sound Money Bitcoin/Gold-Ratio as of May 23rd, 2020. Source:Chaia

Currently, you have to pay 5.15 ounces of gold for one Bitcoin. In other words, a troy ounce of gold currently costs only 0.194 Bitcoin. Since the low point of the corona crash, Bitcoin has been able to outperform gold by a considerable margin.

On top, since the second week of May, Bitcoin has been knocking at the upper edge of the large consolidation triangle once again. Thus, the chances of a breakout to the upside continue to rise. Only if there would be another blatant attack of weakness in Bitcoin we would have to prepare for another round of consolidation lasting several months. Otherwise, and that is what it looks like at the moment, the breakout from the triangle is imminent in these weeks until the summer. Subsequently, a sharp rise in Bitcoin prices would be the logical consequence.

Generally, buying and selling Bitcoin against gold only makes sense to the extent that one balances the allocation in the two asset classes! At least 10% but better 25% of one’s total assets should be invested in precious metals (preferably physically), while in cryptos and especially in Bitcoin one should hold at least 1% up to 5%. Paul Tudor Jones holds a little less than 2% of his assets in Bitcoin. If you are very familiar with cryptocurrencies and Bitcoin, you can certainly allocate higher percentages to Bitcoin and maybe other Alt-coins on an individual basis. For the average investor, who is normally also invested in equities and real estate, 5% in the highly speculative and highly volatile bitcoin is already a lot!

“Opposites compliment. In our dualistic world of Yin and Yang, body and mind, up and down, warm and cold, we are bound by the necessary attraction of opposites. In this sense you can view gold and bitcoin as such a pair of strength. With the physical component of Gold and the digital aspect of Bitcoin you have a complimentary unit of a true safe haven in the 21st century. You want to own both!” – Florian Grummes

Conclusion and Recommendation: Gold – Patience Is A Virtue

Gold doesn’t seem to know where it’s going these days. For weeks now, prices have been clearly trading above US$1,700 and trying to break through the resistance zone between US$1,740 and 1,765 only to fall all the way back to and slightly below US$1,700. At the same time, volatility has been on retreat since March 19th. At least things have calmed down a bit in the gold market. But the bulls still have the upper hand. The bears, on the other hand, have been making increased efforts to reverse the trend since the last high point at US$1,765. Apart from a decline to just under US$1,700, however, they have not (yet) achieved much.

Generally, we should always remember that just before the biggest rises in the gold market, all weak hands are usually shaken off. In this respect, a pullback in early summer remains the preferred scenario. This way, gold prices do not have to fall so extremely low. A decline to US$1,650 or to the rising 200-day line in the US$1,600 range would presumably be completely sufficient. Afterwards, gold would be ready for the next wave up, which should then target the resistance around US$1,800 as well as the all-time high at USD$1,920.

If, on the other hand, gold prices can hold steady above US$1,700 throughout the coming two to three months, the probability increases that there will be a more pronounced correction starting in late summer just a few months before the U.S. elections.

Either way, the risk/reward-ratio for gold is not ideal at the moment. It is therefore advisable to simply remain patient and wait at least until an oversold setup on the daily chart and ideally also on the weekly chart. However, one should not lose sight of gold, because in times of unconditional stimuli from almost all central banks worldwide, every somewhat larger pullback already means a buying opportunity in the gold market.

For a look at all of today’s economic events, check out our economic calendar.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

US/China Conflict – Gold, Oil and Bitcoin in Focus

The soft reopening so far appears to be going well and is leading to further easing measures, including the prospect of travel again before the summer is over which is coming as a huge relief to those in the industry that have been ravaged by the crisis.

The stock market recovery appeared to stall in May but it seems to have found some momentum once again, with the news of human vaccine trials naturally aiding the move. While the data we’re seeing so far is encouraging, there may be diminishing returns so the longer we go without a vaccine or cure, the worse the data could become. Thankfully, what we’re seeing in both of these cases gives us cause for optimism.

Tensions between the US and China are hotting up and Hong Kong is proving to be an interesting battle ground. The US is now believed to be pondering sanctions, as China prepares to vote on a controversial new national security law to be imposed on Hong Kong. As yet, the strained relationship between the US and China hasn’t hampered markets too much but that could quickly change.

Oil looking strong

Oil is slightly paring gains today but continues to make impressive gains more broadly. Naturally, reports of economies successfully easing restrictions is providing a significant boost to oil prices, with the reopening of borders in the coming weeks only further supporting demand and therefore prices.

While the reopening will be gradual and people will take time to emerge from the safe shelter of their homes, particularly when it comes to foreign travel, these are hugely positive moves for oil producers as prices close in on $40. It’s now a question of when they’ll turn on the taps again and how much they choose to or even how fast they’ll be able to.

Gold facing some big tests

Goldis edging lower again today and closing in on $1,700. The yellow metal seemed to lose all momentum not long after eventually breaking through $1,750 resistance. A break back below $1,700 would be troubling for gold, from a psychological perspective, but the $1,660-1,680 region is far more key. A break of this would spell trouble for gold.

Bitcoin fighting back but $8,000 looks vulnerable

Bitcoin found some support around $8,500 this morning and has reversed course to test $9,000, around where it is already starting to struggle. It’s not looking great for the cryptocurrency, with $8,000 being the next major level below. A break of this and it will be like the halving event never happened and all the gains that came its way during that high exposure period will have been lost. Nervy times.

For a look at all of today’s economic events, check out our Economic Calendar.

Craig Erlam, Senior Currency Analyst at OANDA

The Crypto Daily – Movers and Shakers -27/05/20

Bitcoin fell by 0.62% on Tuesday. Partially reversing a 2.20% gain from Monday, Bitcoin ended the day at $8,845.5.

A mixed start to the day saw Bitcoin rise to a late morning intraday high $9,013.3 before hitting reverse.

Falling short of the first major resistance level at $9,037.13, Bitcoin slid to a late afternoon intraday low $8,704.9.

Steering clear of the first major support level at $8,693.43, Bitcoin recovered to $8,800 levels to limit the loss on the day.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from the 62% FIB of $10,034 to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was another mixed day for the majors on Tuesday.

Monero’s XMR rose by 0.24% to buck the trend.

It was a bearish day for the rest of the pack, however.

Bitcoin Cash SV slid by 2.57% to lead the way down.

Binance Coin (-1.04%), Ethereum (-1.58%), Litecoin (-1.61%), Ripple’s XRP (-1.20%), Stellar’s Lumen (-1.76%), and Tezos (-1.54%) also struggled.

Bitcoin Cash ABC (-0.18%), Cardano’s ADA (-0.69%), EOS (-0.76%), and Tron’s TRX (-0.74%) saw relatively modest losses on the day.

Early in the week, the crypto total market cap fell to an early Monday low $238.04bn before rising to a Tuesday high $247.84bn. At the time of writing, the total market cap stood at $243.55bn.

Bitcoin’s dominance fell to a Monday low 66.38% before rising to a Tuesday high 66.86%. At the time of writing, Bitcoin’s dominance stood at 66.57%.

This Morning

At the time of writing, Bitcoin was down by 0.24% to $8,824.0. A mixed start to the day saw Bitcoin rise to an early morning high $8,896.5 before falling to a low $8,822.7.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Cardano’s ADA and Monero’s XMR led the way down, with losses of 0.87% and 0.53% respectively.

Ethereum (+0.28%), Litecoin (+0.17%), and Ripple’s XRP (+0.49%) bucked the trend early on.

BTC/USD 27/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to move through to $8,860 levels to bring the first major resistance level at $9,004.23 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from the morning high $8,896.5.

Barring an extended crypto rally, the first major resistance level would likely limit any upside.

In the event of an extended crypto rally, the second major resistance level at $9,162.97 would likely come into play.

Failure to move back through to $8,860 levels could see Bitcoin fall deeper into the red.

A fall back through the morning $8,822.2 would bring the first major support level at $8,695.83 into play.

Barring another extended crypto sell-off, however, Bitcoin should steer clear of the second major support level at $8,546.17.

Crypto Chartbook: Built not Bought

Built not bought

Why?  The most difficult part in trading is execution. No matter if you trade on a neighbors hunch or a computerized trading system, it is sheer impossible to execute a foreigner’s system. You might spend thousands of dollars on a sophisticated black box software and will find yourself turning it off at exactly the worst moment.

Trading is psychology! When a stranger’s advice hit a series of losses you simply can’t stand the heat anymore. Right at that point though, the winning trades might follow. Consequently you underperform the system since you skipped the execution of those vital winners. Built not bought.

BTC-USDT, Monthly Chart

BTC-USDT, monthly chart as of May 25th, 2020

One core component for ending up in the green is a roadmap. A high time frame overview of what your trading instrument is doing from a larger perspective. In the case of Bitcoin we are finding ourselves at exciting times of a possible triangle breakout to the upside. A strong supply zone right below actual price, supports the general tone to be bullish.

BTC-USDT, Daily Chart – Aggressive Early Entry:

BTC-USDT, daily chart as of May 25th, 2020
BTC-USDT, daily chart as of May 25th, 2020

With the principles of our quad exit strategy minimizing risk, we already took an aggressive weekly long entry based on the above daily 40 simple moving average support and other key factors.

Weekly Chart, Built Not Bought, BTC-USDT versus XMR-USDT, Bitcoin Leading:

BTC-USDT versus XMR-USDT, weekly chart as of May 25th, 2020
BTC-USDT versus XMR-USDT, weekly chart as of May 25th, 2020

To further reduce risk we use an inter-market relationship we recently extracted. The above weekly chart depicts the relationship between Bitcoin (white line) and Monero (dark blue line).

Points 1,2 and 3 are time starting points where you can make out that Bitcoin has found its recent absolute low within that week.

From those points on Bitcoin prices advanced and built over the next weeks double  or triple bottoms. Illustrated by rising green lines. Most likely these price advances created in most trading systems confirmed long entries.

While Bitcoin at the starting points had its recent lows, Monero actually continued each time trading lower in the weeks to follow. Indicated by falling orange lines.

One way of taking advantage of this market relationship between those two trading vehicles would be of taking a confirmed Bitcoin long entry signal and rather trade the still suppressed Monero prices. Risk is smaller due to the tighter stop and better risk-reward ratio. Consequently one could potentially get more bang for the buck.

In a way Bitcoin can be used as a leading indicator for a Monero trade.

BTC-USDT versus XMR-USDT, Weekly Chart, Built Not Bought, Good Exit Timing:

BTC-USDT versus XMR-USDT, weekly chart as of May 25th, 2020 b
BTC-USDT versus XMR-USDT, weekly chart as of May 25th, 2020 b

Let us now look at exits. We find a similar relationship to be mutually beneficial to time exits well on Monero through Bitcoin price observation.

We would like to encourage the reader to find very similar relationships extended through our whole portfolio. This way feeling more familiar with our entry and exit timing. As a result making principles and market relationships that we observed your own as well.

Built not bought

It is the series of trades that make a long term winner, not an individual trade. Since we do not have an intuitive aspect as humans for thinking in probabilities we need to gain psychological strength elsewhere for proper execution. Only in depth knowledge of a trading system paired with repetition of reinforced positive results can lead to execution confidence. We are aware that not everybody can master all aspects of becoming a successful investor in creating their own systems from scratch. There are no free lunches though and as such we encourage to take our trading principles, stack them and make them at least partially your own. You can’t just buy a Ferrari and immediatly expect to win the race. Looking under the hood and being aware of the core components, in addition of taking at least a few driving lessons, is part of becoming a winner.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.


About the Author: Korbinian Koller

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.

How to Invest in Cryptocurrencies: The Complete Guide for 2020

Seasoned investors continue to cross over from the more mature asset classes and regulators have eased off on the Crypto assault that led to the 2018 slump.

With Bitcoin and the broader market sitting at more than 50% below their all-time highs, there is still plenty of incentive to enter the crypto sphere.

For many, however, the crypto market may seem like a maze. There are a tremendous number of exchanges and brokers and that is before considering regulations imposed by regulators in recent years.

Investing in cryptocurrencies requires a level of due diligence not too dissimilar to the research involved in other more mature asset classes.

The volatility and sizeable returns on offer have certainly allowed investors to dream. After all, Bitcoin has yielded a mass number of Bitcoin millionaires, more commonly known as whales.

So, how do we invest in cryptocurrencies?

While there are multiple considerations, some are more important than others when looking to enter the crypto market.

Just jumping in on a whim that the majors will reach historical highs is a dangerous game. This is no dissimilar to jumping into the equity markets when they are sitting at record highs.

There is one material difference, however. The regulatory landscape has materially changed since late 2017. For this very reason, investors may continue to face plenty of uncertainty before the market can find a return to the hay days.

Understanding the key drivers and market characteristics are therefore particularly important.

Basic Essentials

In this guide, you will learn the key preparations that you need in order to build your cryptocurrency portfolio.

Before making an investment, deciding on the source of funds would certainly be step 1.

In spite of the current interest rate environment, it is recommended that you avoid funding the portfolio with debt.

Credit Card or Bank Account – Investors will, therefore, need to decide on cash or credit card. As an investor, you can either fund your crypto trading account with a debit/credit card or by funding with a bank transfer.

It is worth noting, however, that certain jurisdictions have banned the funding of crypto exchanges with credit cards. Some banks have even taken a step further and banned the transfer of fiat money to such exchanges.

Nonetheless, the simplest method to fund a crypto exchange account is with a credit/debit card. This does tend to come with higher fees and caps on transfer amounts, however.

Fiat to Bitcoin Exchange

First, you need to decide on which cryptocurrency or cryptocurrencies that you wish to trade.

You would then need to identify the exchanges that have the largest trading volumes for the chosen cryptocurrencies.

One consideration here is your source of funds. Not all exchanges allow fiat money deposits. A vast majority of exchanges restrict deposits to Bitcoin.

Carrying out the necessary research on the most appropriate exchange is important. If you are looking for an exchange that accommodates the purchase of Bitcoin with fiat money:

Coinbase is popular and easy to use, with a strong global presence. The exchange has the necessary security measures as well as delivering adequate liquidity for trading.

When searching for the right exchange, it is worth noting that each has its pros and cons. The important thing is to identify the exchange that, first and foremost, delivers on your personal requirements.

Other popular exchanges include:

These crypto exchanges not only cater to Bitcoin investors and traders but altcoins in general.

It’s also worth considering exchanges that offer a wider choice of cryptocurrencies and altcoins. This would allow you to diversify your investments and gain exposure to the broader crypto market.

We recommend that you use Coingecko to research the respective cryptocurrencies and volumes across the exchanges.

Bitcoin to Crypto Exchange

The next exchanges that you should look into are the ones you will be using for the Altcoins. Many of the smaller coins, my market cap, are generally not supported by larger exchanges. Generally speaking, the only way to buy those smaller coins is by buying them using Bitcoins or Ethereum.

On most exchanges, you need to deposit Bitcoins as you cannot buy coins directly from the exchange. This is why it’s crucial that you have a Fiat to Bitcoin Exchange first.

You can buy Altcoins from Binance, BitTrex, Kucoin, and Kraken.

Choose the Right Wallet

The next step in the crypto investment journey is to select the appropriate crypto wallets. It is essential to have your crypto wallet before buying any cryptocurrencies. You will need wallets to store your coins within your secure personal wallets.

While exchanges allow investors to hold purchases coins within assigned exchange wallets, it’s recommended that you withdraw your cryptos and hold them in private wallets. This protects you and your investments from hackers and theft. It is also worth noting that wallet compatibility also needs to be considered.

Crypto wallets to choose from include but are not limited to:

Before Getting Started

Prior to deciding on the most suitable crypto exchanges and wallets to support your trading activity, you need a trading strategy. As part of your strategy build, there are a number of factors to keep in mind:

  • Only invest in what you can afford to lose
  • Do not take a loan to invest
  • Do your own research, monitor the news wires, and view technical analysis on the respective cryptos that you decide to go with. FX Empire covers the largest cryptos, with exchanges also providing technical analysis to their users free of cost.
  • Set realistic expectations, don’t be greedy, and know when to accept a loss. (It is easy to be influenced by the news wires and overzealous analysts talking of the next crypto boom or doom. It is best to block out such noise.

Forming a Crypto Trading Strategy

While identifying the most appropriate wallets and exchanges are vital, formulating a trading strategy is undoubtedly the most important pre-investment step for a prospective trader.

Key Decisions:

  • Cryptocurrency selection – A blend of the largest cryptos along with medium-sized to small cryptos by market cap is recommended. This also addresses any liquidity issues for the overall portfolio.
  • Worth noting – A certain cryptocurrencies may have values that exceed the intended investment size. In such instances, identifying an exchange that offers CFDs or partial investment of a crypto coin is important.
  • Trader durations – For traders with adequate time to trade, a short, medium, and longer-term trading strategy would make sense.
    • Smaller size, more volatile, coins increase earnings potential intraday. These should ideally form no more than 20% of the total investment pool.
    • The Largest coins should form longer-term strategies. With adequate research, however, smaller coins may also form part of this strategy.
    • For the more medium-term strategies, which would be anything beyond intraday but less than a month, a blended portfolio is recommended. This can comprise of small, medium, and large-cap coins.
  • In any trading strategy -using risk management tools and indicators is recommended. While there are fees incurred for using stop loss and trade profit, using these would protect your downside.

80/20 Rule

When considering crypto market volatility and the rise and fall of the smaller coins, an 80/20 blend of large-cap to mid to small-cap would be recommended.

This would provide the opportunity to make sizeable gains any sudden surge in the small to mid-cap cryptos, whilst also holding the more stable coins. Do note that stable is a relative term in the crypto market. Even Bitcoin can see sizeable swings on a given day…

Does the Number of Coins Matter?

It ultimately boils down to the investment strategy that you build. With a blended portfolio, 1 Bitcoin may make up your large-cap portfolio, or 20 Litecoin for instance. It is important to focus on the blend rather than the actual number of coins that make up each component of the portfolio.

Recommendations

Below is a range of cryptos to consider the different components of your portfolio. This is not a comprehensive breakdown of the broader market and there may be coins that are more to your liking. As always, carry out the necessary research before hitting the buy or sell order…

Large Caps

Tezos, Ripple, Bitcoin, Ethereum, EOS, Cardano, Bitcoin Cash SV, Bitcoin Cash ABC, and Binance Coin.

Mid-Caps

Zcash, VeChain, True USD, Tron’s TRX, Qtum, OmiseGo, OKB, NEO, Ethereum Classic, Dogecoin, DASH, and Cosmos. These have been selected based on 24-hour volumes and have market caps of between $100m and $1bn.

Low Caps

This will consist of cryptos with a market cap of less than $100m and will likely have lower trading volumes. That means less liquidity, which is why this component should form a lower proportion of the portfolio.

Unibright, Theta Fuel, Status, MCO, Matic Network, IOST, HyperCash, BitTorrent, and ABBC Coin.

Next Steps

Once you have built your strategy, selected your cryptos, opened your trading accounts, and set up your wallets, it’s time to trade.

While you may be able to have a better sense of when to enter more mature markets, such as the global equity market, it’s less simple to pick the right entry point in the crypto world.

Other than entering at an all-time high, there’s no hard and fast rule other than waiting for any sell-off to flatten out.

Once you start trading, remain disciplined, and ensure you run your risk parameters each day.

These will include your charts that should have your support and resistance levels embedded.

And remember, not every trade will yield a return, so don’t panic should your first trade take a hit.

The Crypto Daily – Movers and Shakers -25/05/20

Bitcoin slid by 5.08% on Sunday. Reversing a 0.15% gain from Saturday, Bitcoin ended the week down by 9.91% to $8,710.10.

A bullish start to the day saw Bitcoin rise to a mid-morning intraday high $9,300.0 before hitting reverse.

Bitcoin came up against the first major resistance level at $9,295.47 before falling to a late afternoon low $8,859.2.

The reversal saw Bitcoin fall through the first major support level at $9,064.27 and the second major support level at $8,952.93.

Finding late support, Bitcoin briefly recovered to a high $9,075 before a final hour sell-off.

The sell-off saw Bitcoin slide back through the first major support level and second major support level to an intraday low $8,688.0.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from the 62% FIB of $10,034 to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was also a bearish end to the week on Sunday.

Cardano’s ADA slid by 6.80% to lead the way down.

Bitcoin Cash ABC (-5.47%), Litecoin (-4.08%), Monero’s XMR (-4.06%), Stellar’s Lumen (-4.74%), Tezos (-4.31%), and Tron’s TRX (-5.15% weren’t far behind.

Binance Coin (-3.09%), Bitcoin Cash SV (-3.77%), EOS (-2.84%), Ethereum (-3.38%), and Ripple’s XRP (-3.27%) saw relatively modest losses on the day.

Sunday’s sell-off delivered mixed results for the week, however.

Cardano’s ADA and Tezos bucked the trend, with gains of 0.20% and 0.81% respectively, Monday through Sunday.

It was a week in the red for the rest of the majors, however.

Bitcoin Cash ABC and Stellar’s Lumen led the way down, with losses of 7.72% and 7.04% respectively.

EOS (-4.92%), Monero’s XMR (-6.72%), Ripple’s XRP (-4.45%), and Tron’s TRX (-5.43%) weren’t far behind.

Binance Coin (-1.90%), Bitcoin Cash SV (-2.71%), Ethereum (-3.58%) and Litecoin (-3.75%) saw relatively modest losses for the week.

In the week, the crypto total market cap rose to a Monday low $268.50bn before falling to a Sunday low $239.63bn. At the time of writing, the total market cap stood at $242.29bn.

Bitcoin’s dominance rose to a Monday high 68.31% before falling to a Sunday low 66.51%. At the time of writing, Bitcoin’s dominance stood at 66.64%.

This Morning

At the time of writing, Bitcoin was up by 0.83 to $8,782.2. A mixed start to the day saw Bitcoin fall to an early morning low $8,620.0 before striking a high $8,808.7.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Tron’s TRX (+1.57%), Tezos (+1.20%), Ethereum (+1.06%), Bitcoin Cash ABC (+1.23%), and Binance Coin (+1.11%) led the way early on.

Monero’s XMR was down by 0.15%, however, to buck the trend.

BTC/USD 25/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to move through to $8,900 levels to bring the first major resistance level at $9,110.73 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from the morning high $8,808.7.

Barring an extended crypto rebound, the first major resistance level would likely limit any upside.

In the event of an extended crypto rally, Bitcoin could revisit $9,300 levels before any pullback. We would expect Bitcoin to come up short of the second major resistance level at $9,511.37, however.

Failure to move through to $8,900 levels could see Bitcoin hit reverse.

A fall back through the morning low $8,620.0 would bring the first major support level at $8,498.73 into play.

Barring another extended crypto sell-off, however, Bitcoin should steer clear of the second major support level at $8,287.37.

The Crypto Daily – Movers and Shakers -24/05/20

Bitcoin rose by 0.15% on Saturday. Following on from a 1.14% gain on Friday, Bitcoin ended the day at $9,175.6.

A bullish start to the day saw Bitcoin rise to an early morning intraday high $9,304.0 before hitting reverse.

Coming within range of the first major resistance level at $9,309.13, Bitcoin slid to a midday intraday low $9,072.8.

Steering clear of the first major support level at $8,975.53, Bitcoin briefly revisited $9,200 levels before easing back.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from the 62% FIB of $10,034 to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was a mixed day on Saturday.

Monero’s XMR and Tron’s TRX rose by 0.33% and by 0.95% respectively to join Bitcoin in the green.

It was a bearish day for the rest of the majors, however.

Bitcoin Cash SV (-1.51%), Cardano’s ADA (-1.52%), EOS (-1.04%), Stellar’s Lumen (-1.28%), and Tezos (-1.41%) led the way down.

Binance Coin (-0.66%), Bitcoin Cash ABC (-0.12%), Ethereum (-0.31%), Litecoin (-0.77%), and Ripple’s XRP (-0.90%) saw modest losses on the day.

In the current week, the crypto total market cap rose to a Monday low $268.43bn before falling to a Thursday low $239.96bn. At the time of writing, the total market cap stood at $251.93bn.

Bitcoin’s dominance rose to a Monday high 68.31% before falling to a Friday low 66.90%. At the time of writing, Bitcoin’s dominance stood at 67.01%.

This Morning

At the time of writing, Bitcoin was up by 0.04 to $9,179.3. A mixed start to the day saw Bitcoin fall to an early morning low $9,131.3 before striking a high $9,206.3.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a bullish start to the day.

Tezos was up by 1.34% early in the morning to lead the majors.

BTC/USD 24/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to move through to $9,200 levels to bring the first major resistance level at $9,295.47 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from the morning high $9,206.3.

Barring an extended crypto rebound, the first major resistance level and Saturday’s high $9,304.0 would likely limit any upside.

In the event of an extended crypto rally, the second major resistance level at $9,415.33 would likely come into play.

Failure to move through to $9,200 levels could see Bitcoin hit reverse.

A fall back through the morning low $9,131.3 would bring the first major support level at $9,064.27 into play.

Barring another extended crypto sell-off, however, Bitcoin should steer clear of the second major support level at $8,952.93.

The Crypto Daily – Movers and Shakers -23/05/20

Bitcoin rose by 1.14% on Friday. Partially reversing a 4.68% slide from Thursday, Bitcoin ended the day at $9,162.4.

A bearish start to the day saw Bitcoin fall to an early morning intraday low $8,935.4 before finding support.

Steering clear of the first major support level at $8,726.9, Bitcoin bounced back to a late afternoon intraday high $9,269.0.

Falling short of the first major resistance level at $9,475.7, Bitcoin eased back to sub-$9,200 levels late on.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from the 62% FIB of $10,034 to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was a bullish day on Friday.

Cardano’s ADA rallied by 8.20% to lead the way.

EOS (+5.24%), Ethereum (+4.39%), Tezos (+6.07%), and Tron’s TRX (+4.67%) also found strong support.

Binance Coin (+3.17%), Bitcoin Cash ABC (+3.26%), Litecoin (+3.66%), Monero’s XMR (+2.37%), Ripple’s XRP (+3.30%), and Stellar’s Lumen (+2.31%) trailed the front runners.

Bitcoin Cash SV saw a modest gain of 1.48% on the day.

In the current week, the crypto total market cap rose to a Monday high $268.43bn before falling to a Thursday low $239.96bn. At the time of writing, the total market cap stood at $253.79bn.

Bitcoin’s dominance rose to a Monday high 68.31% before falling to a Friday low 66.90%. At the time of writing, Bitcoin’s dominance stood at 67.03%.

This Morning

At the time of writing, Bitcoin was up by 0.89% to $9,243.5. A bullish start to the day saw Bitcoin rise from an early morning low $9,162.3 to a high $9,266.7.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Binance Coin (+1.05%), Bitcoin Cash ABC (+0.87), and Ethereum (+0.84%) led the way early on.

Bitcoin Cash SV (-0.31%) and Tezos (-0.15%) bucked the trend at the start of the day.

BTC/USD 23/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid sub-$9,200 levels to bring the first major resistance level at $9,309.13 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from Friday’s high $9,269.0.

Barring an extended crypto rebound, the first major resistance level would likely limit any upside.

In the event of an extended crypto rally, the second major resistance level at $9,455.87 would likely come into play. Resistance at $9,500 may limit any upside, however.

Failure to avoid sub-$9,200 levels could see Bitcoin hit reverse.

A fall back through to sub-$9,120 levels would bring the first major support level at $8,975.53 into play.

Barring another extended crypto sell-off, however, Bitcoin should steer clear of the second major support level at $8,788.67.

The Crypto Daily – Movers and Shakers -22/05/20

Bitcoin slid by 4.68% on Thursday. Following on from a 2.74% fall on Wednesday, Bitcoin ended the day at $9,057.1.

A bullish start to the day saw Bitcoin rise to an early morning intraday high $9,564.1 before hitting reverse.

Falling short of the first major resistance level at $9,796.13, Bitcoin slid to a late intraday low $8,815.3.

Bitcoin slid through the first major support level at $9,254.43 and second major support level at $9,006.87 before finding support.

Late in the day, Bitcoin broke back through the second major support level to $9,150 levels before easing back.

In spite of the late pullback saw Bitcoin steered clear of the second major support level.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from the 62% FIB of $10,034 to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was a bearish day on Thursday.

Cardano’s ADA slid by 8.18% to lead the way down.

Bitcoin Cash ABC (-5.01%), EOS (-5.18%), Ethereum (-5.40%), Stellar’s Lumen (-5.98%), Tezos (-6.30%), and Tron’s TRX (-5.35%) also saw particularly heavy losses.

Binance Coin (-4.80%), Litecoin (-3.46%), Monero’s XMR (-4.70%), and Ripple’s XRP (-3.51%) weren’t far behind.

Bitcoin Cash SV saw a relatively modest 1.93% decline to

In the current week, the crypto total market cap rose to a Monday low $268.43bn before falling to a Thursday low $239.96bn. At the time of writing, the total market cap stood at $245.55bn.

Bitcoin’s dominance rose to a Monday high 68.31% before falling to a Wednesday low 67.25%. At the time of writing, Bitcoin’s dominance stood at 67.45%.

This Morning

At the time of writing, Bitcoin was down by 0.59% to $9,004.0. A bearish start to the day saw Bitcoin fall from an early morning high $9,060.2 to a low $8,975.0

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was also a bearish start to the day.

Bitcoin Cash SV and Cardano’s ADA led the way down, with losses of 1.26% and 1.04% respectively.

BTC/USD 22/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to move back through to $9,150 levels to bring the first major resistance level at $9,475.7 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from the morning high $9,060.2.

Barring an extended crypto rebound, the first major resistance level would likely limit any upside.

In the event of a broad-based crypto rally, resistance at $9,500 would likely leave Bitcoin short of the second major resistance level at $9,894.3.

Failure to move back through to $9,150 levels could see Bitcoin spend a 3rd consecutive day in the red.

A fall back through Thursday’s low $8,815.3 would bring the first major support level at $8,726.9 into play.

Barring another extended crypto sell-off, however, Bitcoin should steer clear of the second major support level at $8,396.7.

Ethereum is more Stable than Bitcoin

Crypto assets have become a vivid example of the statement ” What goes up, must come down” and time after time we are convinced of the validity of this phrase. Overcoming the threshold could have opened the way for testing price levels up to $10,500 in the near term, but buyers again lacked the strength. In 7 days Bitcoin shows a decline of almost 4%.

Altcoins moderately follow Bitcoin. The total capitalization in a day decreased by $10 bln. This cannot be called a large-scale sale, but there is a worsening of investor sentiment, which may result in increased sales pressure soon. The Crypto Fear & Greed Index after a 12-point growth over the week showed a daily decline of 3 points, which is a relatively accurate reflection of what is happening in the market.

While all the news was around halving and the likely prospects for Bitcoin after this event, the leading altcoin Ethereum (ETH) demonstrated quiet growth. Since the beginning of the year, Ethereum has grown by 61%, compared to 31% for Bitcoin in the same period. ETH usually follows the increase in Bitcoin, but in the end, it turns out that the coin adds more and loses less.

Favourable prospects for Ethereum are linked to the fact that its network is becoming increasingly active by launching decentralized financial applications (DeFi). ETH holders can block assets in DeFi smart contracts with different purposes, which reduces the circulation of coins, naturally creating an effect that is achieved in the bitcoin network by halving. Bitcoin maximalists do not see Ethereum as a threat, but there is no point in believing that a network after switching to 2.0 cannot be a worthy competitor to bitcoin.

Bitcoins mined at the very beginning of the network’s existence have long been at the centre of attention of the crypto community. The reaction to the transfer of 50 bitcoins, which have been motionless since 2009, has been decisively strong. These coins were received as a reward when the network had less than 100 transactions and only a few people, including Satoshi himself, were mining BTC. Such fund transfers now have a much higher response in the community than transfers of tens of thousands of bitcoins with fees less than a dollar. However, fast and cheap international transfers, bypassing numerous intermediaries, are precisely the direction that still needs to be developed and where the traditional sluggish banking system continues to hold the lead.

by Alex Kuptsikevich, the FxPro senior market analyst.

The Crypto Daily – Movers and Shakers -20/05/20

Bitcoin rose by 0.56% on Tuesday. Following on from a 0.48% gain on Monday, Bitcoin ended the day at $9,769.4.

A bearish start to the day saw Bitcoin fall to an early morning intraday low $9,457.8.

Bitcoin fell through the first major support level at $9,461.87 before rallying to a late morning intraday high $9,878.0.

Falling short of the first major resistance level at $9,955.87, Bitcoin slid back to $9,550 levels and into the red.

Finding support late in the day, however, Bitcoin broke back through to $9,700 levels to end the day in the green.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from the 62% FIB of $10,034 to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was a mixed day on Tuesday.

Binance Coin, Cardano’s ADA, and Tezos rallied by 3.61%, 4.75%, and by 3.19% to lead the way.

Bitcoin Cash ABC (+0.18%), Litecoin (+0.97%), and Tron’s TRX (+2.29%) also found support on the day.

Bitcoin Cash SV (-1.59%), EOS (-0.28%), Ethereum (+0.07%), Monero’s XMR (-0.10%), Ripples XRP (-0.19%), and Stellar’s Lumen (0.64%) struggled, however.

In the current week, the crypto total market cap rose to a Monday low $268.43bn before falling to a Tuesday low $257.06bn. At the time of writing, the total market cap stood at $264.80bn.

Bitcoin’s dominance rose from a Monday low 67.61% to a Tuesday high 67.96% before easing back. At the time of writing, Bitcoin’s dominance stood at 67.89%.

This Morning

At the time of writing, Bitcoin was down by 0.01% to $9,768.6. A mixed start to the day saw Bitcoin fall to an early morning low $9,753.5 before striking a high $9,791.3.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was also a mixed start to the day.

Bitcoin Cash ABC (-0.62%), Cardano’s ADA (-0.30%), Ethereum (-0.09%), and Tron’s TRX (-1.22%) saw red early on.

Bitcoin Cash SV led the rest of the majors, however, with a 1.28% gain.

BTC/USD 20/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid sub-$9,700 levels to bring the first major resistance level at $9,945.67 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from Tuesday’s high $9,878.0.

Barring an extended crypto rally, the first major resistance level would likely limit any upside.

In the event of an extended crypto rally, the 62% FIB of $10,034 and the second major resistance level at $10,121.93 would likely come into play.

Failure to avoid sub-$9,700 levels could see Bitcoin fall deep into the red.

A fall back through to sub-$9,700 levels would bring the first major support level at $9,525.47 into play.

Barring an extended crypto sell-off, however, Bitcoin should steer clear of the second major support level at $9,281.53.

US Open – Full of Optimism

The week has got off to a decent start, with Europe up a couple of percent and Wall Street eyeing a similar open as lockdown easing measures provide cause for optimism.

In these uncertain times, I’m sure that optimism will be replaced with fear, which in turn will be replaced with promise and maybe even a sprinkling of exuberance, repeatedly over the coming months only for the cycle to start again. Ultimately, it all depends on the second wave, when it rears its ugly head and how bad it is. Not to mention how far the testing, vaccine and cure has come along in the interim. But this morning we’re optimistic, so that’s nice.

At times like this, you wonder what impact people’s general mood has on the markets. We all want to be safe but the ability to leave your house, maybe go to work, see friends and family (while abiding by the latest guidelines, of course) and even grab a coffee will naturally put people in a better mood after two months of lockdown. The fact that the sun is shining doesn’t do any harm either.

Obviously there’s the far more fundamental benefits of all of this. As businesses reopen, more people can return to work which means more companies may survive and people’s jobs be saved. We’re in the midst of a severe recession, there’s little we can do about that but the more life returns to normal, the less severe it will be. From a markets perspective, this is the second most important thing behind avoiding a second wave that sets us back a month.

No repeat of last month, it seems, for June WTI contract

If there’s going to be a repeat of last month’s antics in the oil market, it’s going to come as an even greater shock this time around. We’ve gone full 180 and rather than plunging to new depths, the rally is only gaining momentum, with the June contract up almost 10% and above $32 a barrel.

The supply cuts of the last month combined with gradual reopening of various countries around the world has put a significant dent in the supply/demand imbalance and alleviated capacity concerns that led to last months panic.

Gold springs back to life above $1,750

Gold has sprung back to life in recent sessions and taken the previous highs with relative ease. Now above $1,760, it’s looking very bullish indeed. There seems to be widespread agreement that the fundamental factors are supportive of gold prices, with the dollar the only major headwind.

But it’s inflation that we all appear destined to be talking about for the foreseeable. It makes sense, unprecedented stimulus, higher costs of doing business and deglobalisation are all inflationary, at least in theory. An inflaiton hedge is one of the core arguments in favour of gold and will likely be a key talking point in the months ahead.

A lot of pressure on $10,000

Bitcoin survived another run at $10,000 last week and has already been on the defensive again today. This is another key battleground and one that looks to currently favour the bulls. That momentum could fade with a break of $9,000 but at the time of writing, it’s looking less likely.

For a look at all of today’s economic events, check out our economic calendar.

Craig Erlam, Senior Currency Analyst at OANDA

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The Crypto Daily – Movers and Shakers -18/05/20

Bitcoin rallied by 3.01% on Sunday. Following on from a 0.86% gain on Saturday, Bitcoin ended the week up by 10.86% to $9,668.2.

It was a bullish start to the day. Bitcoin rallied from an early morning intraday low $9,329.7 to a mid-afternoon intraday high $9,883.5 before hitting reverse.

Bitcoin broke through the first major resistance level at $9,571.33 and the second major resistance level at $9,754.67.

A late pullback saw Bitcoin fall through the second major resistance level to $9,601.9 before finding support.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from $10,000 levels to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was a mixed end to the week.

Ethereum led the rest of the pack, rallying by 3.27%.

Binance Coin (+1.31), Bitcoin Cash ABC (+0.90%), Bitcoin Cash SV (+1.12%), Cardano’s ADA (+0.41%), Litecoin (+1.11%), Ripple’s XRP (+0.79%), Stellar’s Lumen (+1.51%), and Tron’s TRX (+0.34%) also saw green.

Monero’s XMR (-0.14%) and Tezos (-0.49%) bucked the trend on the day, with relatively minor losses.

It was a bullish week for the majors, however. Ethereum and Monero’s XMR rallied by 10.34% and by 10.58% to lead the way.

Binance Coin (+5.79%), Cardano’s ADA (+7.33%), EOS (+6.99%), Stellar’s Lumen (+6.23%) also found strong support.

Bitcoin Cash ABC (+2.44%), Bitcoin Cash SV (+3.48%), Litecoin (+3.78%), Ripple’s XRP (+2.07%), Tezos (+2.45%), and Tron’s TRX (+4.93%) trailed the front runners.

Through the week, the crypto total market cap rose from a Monday low $229.41bn to a Thursday high $265.28bn. At the time of writing, the total market cap stood at $265.59bn.

Bitcoin’s dominance visited sub-67% levels before recovering. At the time of writing, Bitcoin’s dominance stood at 67.5%.

24-hour trading volumes rose to an early Monday high $206.86bn before easing back to sub-$140bn levels. Interest picked up on mid-week, however, with volumes revisiting $190bn levels before easing back. At the time of writing, 24-hr volumes stood at $129.67bn.

This Morning

At the time of writing, Bitcoin was up by 0.74% to $9,740.1. A bullish start to the day saw Bitcoin rise from an early morning low $9,668.1 to a high $9.774.8.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was also a bullish start to the day for the majors. Binance Coin led the way early on, with a 1.51% gain.

BTC/USD 18/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid sub-$9,630 levels to bring the first major resistance level at $9,924.57 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from Sunday’s high $9,883.5.

Barring an extended crypto rally, the first major resistance level would likely limit any upside.

In the event of rebound, the 62% FIB of $10,034 and the second major resistance level at $10,180.93 would likely come into play.

Failure to avoid sub-$9,630 levels could see Bitcoin struggle at the start of the week.

A fall back through to sub-$9,600 levels would bring the first major support level at $9,370.77 into play.

Barring a crypto sell-off, however, Bitcoin should steer clear of sub-$9,000 levels. The second major support level at $9,073.33 would likely limit any downside.

The Crypto Daily – Movers and Shakers -17/05/20

Bitcoin rose by 0.86% on Saturday. Partially reversing a 4.90% slide from Friday, Bitcoin ended the day at $9,388.0.

A bullish start to the day saw Bitcoin rise from an intraday low $9,222.0 to an early morning intraday high $9,580.0.

Falling short of the first major resistance level at $9,730.0, Bitcoin fell back to sub-$9,300 levels by the late afternoon.

The visit into the red was brief, however, with support from the broader market kicking in late in the day.

Bitcoin broke back through to $9,400 levels before easing back in the final hour.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from $10,000 levels to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was a bullish day on Saturday.

Monero’s XMR and Tezos led the way, with gains of 4.22% and 5.78% respectively.

Binance Coin (+2.42%), Cardano’s ADA (+1.81%), EOS (+1.90%), Ethereum (+3.02%), Stellar’s Lumen (+1.85%) also found strong support.

Bitcoin Cash ABC (+0.26%), Bitcoin Cash SV (+0.89%), Litecoin (+1.33%), Ripple’s XRP (+0.81%), and Tron’s TRX (+0.76%) trailed the front runners.

Through the current week, the crypto total market cap rose from a Monday low $229.41bn to a Thursday high $265.28bn. At the time of writing, the total market cap stood at $260.41bn.

Bitcoin’s dominance visited sub-67% levels before recovering. At the time of writing, Bitcoin’s dominance stood at 67.3%.

24-hour trading volumes rose to an early Monday high $206.86bn before easing back to sub-$140bn levels. Interest picked up on mid-week, however, with volumes revisiting $190bn levels before sliding back. At the time of writing, 24-hr volumes stood at $118.41bn.

This Morning

At the time of writing, Bitcoin was up by 1.44% to $9,523.1. A mixed start to the day saw Bitcoin fall to an early morning low $9,329.7 before striking a high $9,581.7.

Steering clear of the major support levels, Bitcoin broke through the first major resistance level at $9,571.33 early on.

Elsewhere, it was a mixed start to the day for the majors.

Bitcoin Cash SV led the way, with a 0.82% gain, while EOS and Monero’s XRM bucked the trend, with losses of 0.05% and 0.49% respectively.

BTC/USD 17/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid sub-$9,500 levels to break back through the first major resistance level at $9,571.33.

Support from the broader market would be needed, however, for Bitcoin to break out from the morning high $9,581.7.

Barring an extended crypto rebound, the first major resistance level and Saturday’s high $9,580 would likely limit any upside.

In the event of an extended rally, the second major resistance level at $9,754.67 would likely come into play before any pullback.

Failure to break back through the first major resistance level could see Bitcoin hit reverse.

A fall back through to sub-$9,400 levels would bring the first major support level at $9,213.33 into play.

Barring a crypto sell-off, however, Bitcoin should steer clear of sub-$9,000 levels. The second major support level at $9,038.67 would likely limit any downside.

The Crypto Daily – Movers and Shakers -16/05/20

Bitcoin slid by 4.90% on Friday. Reversing a 5.14% rally from Thursday, Bitcoin ended the day at $9,311.2.

A mixed start to the day saw Bitcoin slide from an intraday high $9,848.9 to an early morning low $9,260.0.

Bitcoin fell through the first major support level at $9,391.9 before recovering to $9,800 levels.

The recovery was brief, however. Through the 2nd half of the day, Bitcoin slid to a late intraday low $9,130.2.

Bitcoin fell back through the first major support level to wrap up the day in the deep red.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from $10,000 levels to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was a bearish day on Friday.

Binance Coin (-4.33%), Bitcoin Cash SV (-4.39%), Ethereum (-4.28%) and Monero’s XMR (-4.15%) led the way down.

Bitcoin Cash ABC (-2.91%), Litecoin (-2.98%), Ripple’s XRP (-3.13%), Stellar’s Lumen (-3.00%), Tezos (-2.51%), and Tron’s TRX (-3.39%) weren’t far behind.

Cardano’s ADA and EOS saw more modest losses of 1.49% and 1.73% respectively.

Through the current week, the crypto total market cap rose from a Monday low $229.41bn to a Thursday high $265.28bn. At the time of writing, the total market cap stood at $256.87bn.

Bitcoin’s dominance visited sub-67% levels before recovering. At the time of writing, Bitcoin’s dominance stood at 67.2%.

24-hour trading volumes rose to an early Monday high $206.86bn before easing back to sub-$140bn levels. Interest picked up on mid-week, however, with volumes revisiting $190bn levels. At the time of writing, 24-hr volumes stood at $148.96bn.

This Morning

At the time of writing, Bitcoin was up by 0.56% to $9,363.6. A mixed start to the day saw Bitcoin fall to an early morning low $9,222.0 before striking a high $9,417.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a bullish start to the day for the majors.

Bitcoin Cash ABC and Monero’s XRM led the way with gains of 1.35% and 1.31% respectively.

BTC/USD 16/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to move through to $9,430 levels to bring the first major resistance level at $9,730.0 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from the morning high $9,417.0.

Barring an extended crypto rebound, the first major resistance level and Friday’s high $9,848.9 would likely limit any upside.

In the event of rebound, the 62% FIB of $10,034 could come into play before any pullback.

Failure to break back through to $9,430 levels could see Bitcoin hit reverse.

A fall back through the morning low $9,222.0 would bring the first major support level at $9,011.3 into play.

Barring a crypto sell-off, however, Bitcoin should steer clear of the second major support level at $8,711.4.

The Crypto Daily – Movers and Shakers -15/05/20

Bitcoin rallied by 5.14% on Thursday. Following on from a 5.68% breakout on Wednesday, Bitcoin ended the day at $9,791.0.

A mixed start to the day saw Bitcoin fall to an early morning low $9,266.2 before making a move.

Steering clear of the first major support level at $8,938.33, Bitcoin rallied to a late morning intraday high $9,938.7.

Bitcoin broke through the first major resistance level at $9,564.83 and the second major resistance level at $9,781.67.

Pinned back by resistance at $10,000, Bitcoin fell back through the major resistance levels before a late recovery.

The late recovery saw Bitcoin break back through the first and second major resistance levels to wrap up the day at $9,790 levels.

The near-term bearish trend, formed at late June 2019’s swing hi $13,764.0, remained firmly intact, reaffirmed by the March swing lo $4,000.

For the bulls, Bitcoin would need to break out from $10,000 levels to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the majors, it was another mixed day on Thursday.

EOS rallied by 4.01% to lead the rest of the majors.

Bitcin Cash ABC (+2.08%), Bitcoin Cash SV (+1.49%), Ethereum (+1.74%), Litecoin (+1.73%), and Tron’s TRX (+1.45%) also found strong support.

Binance Coin (+0.86%), Monero’s XMR (+0.35%), and Ripple’s XRP (+0.96%) trailed the front runners.

Cardano’s ADA (-1.22%), Stellar’s Lumen (-0.96%), and Tezos (-0.22%) bucked the trend on the day.

Through the current week, the crypto total market cap rose from a Monday low $229.41bn to a Thursday high $265.28bn. At the time of writing, the total market cap stood at $260.67bn.

Bitcoin’s dominance visited sub-67% levels before recovering. At the time of writing, Bitcoin’s dominance stood at 67.5%.

24-hour trading volumes rose to an early Monday high $206.86bn before easing back to sub-$140bn levels. Interest picked up on mid-week, however, with volumes returning to $190bn levels on Thursday. At the time of writing, 24-hr volumes stood at $183.73bn.

This Morning

At the time of writing, Bitcoin was down by 3.09% to $9,488.6. A bearish start to the day saw Bitcoin fall from an early morning high $9,848.9 to a low $9,260.0.

Bitcoin fell through the first major support level at $9,391.90 before finding support.

Elsewhere, it was also a bearish start to the day for the majors.

Litecoin was down by 1.91% to lead the rest of the pack into the red early on.

BTC/USD 15/05/20 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to break back through to $9,665 levels to bring the first major resistance level at $10,064.40 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from Thursday’s high $9,938.7.

Barring a broad-based crypto rebound, however, resistance at $10,000 would likely leave Bitcoin short of the major resistance levels.

In the event of rebound, the second major resistance level at $10,337.8 could come into play.

Failure to break back through to $9,665 levels could see Bitcoin fall deeper into the red.

A fall back through the first major support level would bring the second major support level at $8,992.8 into play.

Barring an extended crypto sell-off, however, Bitcoin should steer clear of sub-$9,000 levels.

US Open – Waking From a Stimulus Induced Dream – Oil, Gold and BTC in Focus

The Addiction Needs Feeding

Federal Reserve Chairman, Jerome Powell’s, comments were hardly comforting on Wednesday. A bleak assessment of the outlook combined with demands for more fiscal stimulus – at a time when Congress looks deeply divided on the issue – and a rejection of negative rates wasn’t exactly what investors wanted to hear right now.

Of course, there’s already unprecedented amounts of stimulus flowing around the financial system in a bid to avert a global depression but we are already in a severe recession. Any hope of a V shaped recovery is long gone and we’re in full damage limitation mode. Perhaps the reality is finally setting in, although who would be surprised to see equities marching higher again tomorrow?

It’s long been said that markets are hooked on stimulus, only more of the drug can sustain them. If that was true before then it’s certainly looking the case now and even the staggering efforts we’ve seen in recent months may not be enough. Only more will do.

No sign of nerves ahead of June expiry

Oil prices are on the rise again this morning following a mixed day on Wednesday. A surprise drawdown in inventories was quickly offset by Powell’s comments but they didn’t hold oil back for long. Up around 5% already today as it continues to slowly grind higher. There’s no sign of nervousness going into Tuesday’s June expiry, although it’s worth noting that the carnage only started a day before last month. Either traders have short memories or we’re going to avoid a repeat of last month. I wouldn’t bet against either.

Gold testing range

Gold saw plenty of activity on Wednesday around Powell’s appearance and even managed to cling onto some of those gains despite his insistence that negative rates is not something they’re considering. I often get confused as to why markets get so hung up on specific policy moves when there’s so many other tools available that are far more effective. Still, it’s a relief to see the yellow metal moving again, a break above last week’s peak around $1,722 could be very encouraging for gold bulls.

Bitcoin threatening bullish $10,000 breakout

Bitcoin has found a new lease of life and is pushing $10,000 again as it looks to capitalise on the halving hype and take it back into five figure territory and keep it in the headlines. It’s run into resistance once again this morning but I don’t think the fight will end there. A break of $10,000 would be very bullish for the cryptocurrency and we’ve all seen what that can lead to. The previous peak around $10,500 may provide some resistance above but the next real test will be $11,000, although I wouldn’t be confident of that holding for very long.

For a look at all of today’s economic events, check out our economic calendar.

This article was written by Craig Erlam Senior Currency Analyst at OANDA.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Bitcoin Defies Gravity

From the technical analysis side, Bitcoin got support after a dip to a 200-day moving average near $8,500. If bitcoin can go above the big round level 10K, it will give hope to the whole crypto market.

Market sentiment on the eve of halving could not be called cheerful. There was quite a lot of equipment for bitcoin mining, which barely made any profit. After the reward reducing, these ASICs would have to be turned off. According to the latest data from The Block, the reduction in hash rate after halving has already been 16%.

The miners’ revenues have dropped by 44%. However, now market participants are waiting for a recalculation of the difficulty, which will slightly correct the situation. Anyway, this may only be the beginning of the process, as even more efficient devices for mining barely pay off.

It is highly probable that some of the miners will start selling their assets to cover the losses. Others will go out of business, and if they have debts, they will also have to cover their costs by selling coins. It will also be possible to talk about continuing the process of consolidation of the mining market participants, as well as even more centralization of computing power. For a decentralized project, this sounds like bad news.

However, this may only be the first shock. As bitcoin pricing is now driven not only by miners and retail investors but also by large institutional investors and funds, clashes can be mitigated by increased trading volumes and the diversity of participants. CoinMarketCap data shows that current average trading volumes are several times higher than the peak values of 2017. The market has grown, matured, and it is very likely that current events in the global economy will have a more significant impact on the coin.

Sad news for the “crypto” as a whole came from the US. Expelled from Russia, Pavel Durov (Vkontakte and Telegram founder)  can’t launch his cryptocurrency in integration with Telegram messenger in the US. American courts are on the side of the SEC, once again confirming the main idea of the US monetary authorities: no competitors to the dollar will be allowed into the mainstream.

The TON technology will be used, but without the user base of the messenger, it won’t be of interest. A similar fate awaited Libra, which leads us to the idea that the crypto market will be allowed to live only in its current state and size, waiting for the launch of official national cryptocurrencies.

 by Alex Kuptsikevich, the FxPro senior financial analyst.

US Open – Markets, UK GDP, Oil, Gold, Bitcoin

Mixed Feelings on Lockdown Easing

The stock market rebound is running on fumes, it seems, as investors come to terms with the reality of what easing lockdown measures actually means.

We’ve all heard of the dreaded second wave for some time. It’s why politicians everywhere have been repeatedly stressing the importance of patience, in regards to abiding by and easing lockdown measures. I’m just not sure people really expected the risk to appear so soon, before many countries had started to emerge from the first lockdown.

It’s worth stressing that it’s still very early days and new cases that are emerging are just an expected increase that comes from such action, rather than a spike that warrants further restrictions. Either way, it certainly appears to have taken its toll on stock markets. At a time when so many are wondering why they’re so disconnected from the reality of severe recessions and huge uncertainty, perhaps that’s not such a bad thing.

UK GDP a reminder of the cost of lockdown

The UK is in the process of easing restrictions this week, with new rules around exercise, and leisure coming into force today, a move that has been met with mixed feelings unsurprisingly. The odds of broad agreement in these unprecedented time are slim to none. The timing of the GDP data this morning is therefore a timely reminder of the damage the lockdown is having and it was only in place for the final week of March.

And already the stories are starting to emerge regarding how the government plans to pay for all of this economic support, estimated to be £300 billion this year, with reports of tax hikes, freezes to pay and more. The end of austerity didn’t last very long.

Hesitancy potentially creeping in ahead of WTI expiry

Oil prices are a little flat today. Less than a week to go until the June contract expiry and perhaps it’s making traders a little nervous and more hesitate about joining the great rebound. A repeat of last month looks unlikely at this point but then, did it this time a month ago? It will be interesting to see how this unfolds.

Nothing new to report on gold

I’m tempted to copy and paste my gold comments from a day or two ago as there’s very little different to report. Gold is currenly trading slightly above $1,700 rather than slightly below which is progress, I guess. Nothing has fundamentally changed though and consolidation is still clear for all to see. Perhaps given the tight ranges, a breakout is almost upon us but maybe that’s more a case of me wishing for it than anything else.

Bitcoin settled in middle of halving hype range

Bitcoin is trading in the middle of its halving hype range, sitting around $9,000 this morning. There isn’t too much to discuss on this at the moment. The lower end of this range arguably looks the more vulnerable but that’s not clear right now and it may simply settle into this $8,000-10,000 range for a while.

For a look at all of today’s economic events, check out our economic calendar.

This article was written by Craig Erlam Senior Currency Analyst at OANDA.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.