Bitcoin Fights for Breakout as Ethereum Sees Correction from its ATH

The momentum for Ethereum has been high over the past few days. The coin recorded an ATH above $3,523.59 yesterday and gave Bitcoin bulls the needed nudge to push the coin’s price to a new horizon. Together, Bitcoin and Ethereum dominate the $2.29 trillion global crypto market cap by 61.9%. A look at their current price movers will showcase which project contributes more to this combined cap weighting.

Bitcoin’s Retarded Growth Casts Doubt on its Market Leadership

For the past decade, Bitcoin has been seen as the undisputed leader of the global crypto market, wielding a massive influence over the space. This recognition is, however, fading away as the coin has not made any move close to its ATH of $64,500 for about 3 weeks now. For several reasons ranging from the Xinjiang mining zone blackout to fears of increased capital gains tax has contributed to keeping the premier cryptocurrency well below the $60,000 psychological level.

At the time of writing, BTC is down by 0.25% to $55612.2 according to data from CEX.IO price feeds.

The BTC-USD 4H Chart above shows the market is at a point of indecision with a likely overbearing influence from the bulls. A continuous push up across the signal line can send price toward the upper region of the Bollinger Band, in a bid to retest the $60,000 price levels. Should the bulls succeed in stabilizing price above this level, Bitcoin may regain buyers’ confidence to end Q2 at a price valuation of $80,000 per coin.

Ethereum Charting a New Course for itself

Ethereum has almost completely broken off its correlation with BTC and is now charting a new path for itself. Despite its current price of $3370.33 or 1.69% dip in the past 24 hours falling below its ATH above $3500, ETH is still outpacing BTC on the weekly gain level by 24.51% to 0.46% respectively.

The latest short squeeze on derivatives exchanges forced the new ATH, fueled by the growing institutional manager’s inflow into the asset. While these may be intermittent, investors are very bullish on the future prospect of the network per the EIP 1559 and ETH 2.0 potential rollout.

Per the short term SMAs which ETH price is currently trading above, the bullish momentum is heightened, and while the coin has beaten its Q2 target of $3,000, a move toward the Q4 target above $4,900 is now being anticipated.

For both BTC and ETH, intermittent price reversals may be experienced before the targets are met.

Konstantin Anissimov, Executive Director at CEX.IO

PayPal Top Earnings Forecasts, Bets on Crypto

PayPal Holdings, Inc. (PYPL) shares rocketed over 4% higher in Wednesday’s extended-hours trading session after the company delivered a stellar quarterly earnings report.

The San Jose digital payments giant reported an adjusted first quarter (Q1) profit of $1.22 per share, blowing pasts Wall Street’s expectation of $1.01 a share. Moreover, the bottom line grew 85% from a year earlier. Revenues for the period came in at $6.03 billion, up from year-ago sales of $4.62 billion. Volume and user metrics also impressed, with the company processing $285 billion in the quarter and adding 14.5 million net new active accounts.

Looking ahead, management forecasts Q2 EPS of $1.12 on revenues of $6.25 billion. Analysts had expected earnings of $1.10 on sales of $6.16 billion. The company sees cryptocurrency continuing to drive growth in upcoming quarters. “We’ve got a tremendous amount of really great results going on tactically with our crypto efforts,” CEO Dan Schulman told investors, per CNBC. PayPal initially introduced leading cryptocurrencies to its platform last October and has progressively added more integration with digital assets over the past six months.

Through Wednesday’s close, PayPal stock has a market capitalization nearing $300 billion and trades nearly 100% higher over the last 12 months. YTD, the shares have added 5.64%, which trails the S&P 500’s gain of 11% over the same period.

Wall Street View

Late last month, Rosenblatt Securities analyst Sean Horgan raised his price target on the stock to $350 from $320 and maintained his ‘Buy’ recommendation. Horgan sees the payments giant continuing to benefit from higher levels of consumer spending, fueled by record levels of government stimulus.

Elsewhere, the stock racks up mostly favorable brokerage coverage. It receives 36 ‘Buy’ ratings, 5 ‘Overweight’ ratings, and 6 ‘Hold’ ratings. Just one analyst recommends selling the shares. Wall Street has a 12-month price median price target on the stock at $314.55. This represents 27% of upside from yesterday’s $247.40 close.

Technical Outlook and Trading Tactics

PayPal shares have recently retraced to a multi-month uptrend line extending back to the March 2020 pandemic-induced low. Although the price broke below this closely-watched indicator in Wednesday’s session, pre-market trading indicates a move back above it after the company’s solid earnings report.

Providing the stock closes above the trendline, active traders should anticipate a retest of the YTD high at $309.14. Protect capital with a stop-loss order placed under today’s low.

For a look at today’s earnings schedule, check out our earnings calendar.

Bitcoin: Still No Advantage, Waiting For Better Prices.

In my previous video, I highlighted a number of price scenarios and one of them were a higher low established off of the 52K area. We almost got that one, except that price, refuses to break 53K. For shorter time frame strategies like day trading, these sharp single candle moves offer excellent opportunities, but for swing trades, the risk is too high.

Here is what I mean: If we go long at 58K, proportional risk for a swing trade is now around 53K which means I have to risk at LEAST 5K points. In order to justify this, Bitcoin needs to push to 63K in the next leg just to reach a 1:1 reward/risk ratio. The probability of that scenario is much lower compared to if I bought around 50K, risked only 3K points, and required a retrace back to the middle of the range (55 to 58K area). The probability of a retrace back to the middle of the range is much greater than of the range low.

Since we trade rules for our swing trade strategy, we have no choice but to wait this out. Bitcoin either tests the range low again, (between 52K and 50K) and provides a setup, or we don’t assume any new risk. Waiting for the right level and setup is much more effective when it comes to returns over time compared to taking numerous low-probability trades. Many traders and investors don’t realize, over time, the losing trades cost way more than the few random wins from chasing action.

If you would like to know more about our strategy, please visit.

Bitcoin And Ether Both Higher

wed #3

Today’s closing price is right where the Monday’s close, and we have effectively formed a Doji on a weekly candlestick chart. We continue to see BTC as being in a consolidation stage, unsure of which direction it will take next.

mon #1

wed #2

But if you owned BTC futures, you made almost 5% in profits today, 7% if you owned Greyscale Ethereum Trust (+7.65%). ETHE went up more than Ethereum itself, which only gained +1.92% on the day at the time of writing.

wed #1

Bitcoin’s dominance continues to dwindle, now sitting at around 45%. And while Ethereum’s share of the crypto space has been rising, it still remains under 20%. It seems that Alt. Coins have benefited the most from this recent bull run.

Bitcoin and Banks

On the fundamental front, hundreds of U.S. banks (mostly small) have signed up for a service that will allow their customers access to Bitcoin.

“What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships,” Sells said. “If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin.” – Yan Zhao, president of NYDIG.

While Devotion Public Data, which is a merchant to keeps money with almost 300 million financial records, will deal with the connection to moneylenders, NYDIG will deal with bitcoin care and exchange execution. Exposures will clarify that it is NYDIG, and not the banks, that handle the bitcoin, and the digital currency will not be FDIC-protected, as indicated by Zhao.

The Crypto Daily – Movers and Shakers – May 5th, 2021

Bitcoin, BTC to USD, slid by 6.81% on Tuesday. Reversing a 0.96% gain from Monday, Bitcoin ended the day at $53,251.0.

It was a particularly bearish day. Bitcoin slid from an early morning intraday high $57,166.0 to a final hour intraday low $53,067.0.

The extended sell-off saw Bitcoin fall through the first major support level at $56,124 and the second major support level at $55,100.

The near-term bullish trend remained intact in spite of the slide back to $53,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Bitcoin Cash SV (-12.62%), Crypto.com Coin (-10.36%), and Ripple’s XRP (-10.85%) led the way down.

Binance Coin (-9.99%), Cardano’s ADA (-6.75%), and Ethereum (-5.65%) also struggled.

Chainlink (+8.34%), Litecoin (+3.59%), and Polkadot (+0.35%) bucked the trend on the day, however.

Early in the week, the crypto total market rose to a Monday high $2,331bn before falling to a Tuesday low $2,064bn. At the time of writing, the total market cap stood at $2,216bn.

Bitcoin’s dominance rose to a Monday high 49.39% before falling to a Tuesday low 46.04%. At the time of writing, Bitcoin’s dominance stood at 46.62%.

This Morning

At the time of writing, Bitcoin was up by 3.85% to $55,300.0. A mixed start to the day saw Bitcoin fall to an early morning low $52,960.0 before rising to a high $55,425.0.

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

Elsewhere, it was a bullish start to the day.

At the time of writing, Bitcoin Cash SV was up by 10.60% to lead the way.

BTCUSD 050521 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall back through the pivot level at $54,495 to support a run at the first major resistance level at $55,922.

Support from the broader market would be needed for Bitcoin to breakout from this morning’s high $55,425.0.

Barring an extended crypto rally, the first major resistance level and resistance at $56,000 would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at $60,000 before any pullback. The second major resistance level sits at $58,594.

Failure to avoid a fall back through the pivot at $54,495 would bring the first major support level at $51,823 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of sub-$50,000 levels. The 23.6% FIB of $50,473 and the second major support level at $50,396 should limit the downside.

S&P Dow Jones Brings Bitcoin, Ethereum to Wall St with Cryptocurrency Indexes

The new indexes, S&P Bitcoin Index, S&P Ethereum Index and S&P Crypto Mega Cap Index, will measure the performance of digital assets tied to them.

The list will expand to include additional coins later this year, the division of financial data provider S&P Global said.

The company first announced the plan in December when it said it would cover more than 550 of top-traded coins and that its clients will be able to create customized indices and other benchmarking tools on cryptocurrencies.

“Traditional financial markets and digital assets are no longer mutually exclusive markets,” said Peter Roffman, global head of innovation and strategy at S&P Dow Jones Indices.

The indexes will use data from New York-based virtual currency company Lukka.

Bitcoin, the most popular cryptocurrency, has seen a wild rally in prices after backing from high-profile companies including Tesla and Bank of NY Mellon. Its price, however, has come off its record highs.

Ethereum, meanwhile, touched a record high on Monday after rising above $3,000 for the first time over the weekend.

(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur)

Sotheby’s to Accept Bitcoin, Ethereum for Banksy Auction

Bidding for the work is estimated at $3 million to $5 million, Sotheby’s said, with the buyer having the option to pay with cryptocurrency.

The auction house has tied up with cryptocurrency exchange Coinbase Global Inc for the sale. Coinbase said in a blog https://bit.ly/3vGLwbz it would help manage price fluctuations during the auction in New York next week.

Bitcoin hit a record high just shy of $65,000 last month, the latest landmark on the emerging asset’s march to wider acceptance. Its gains have been fueled by growing acceptance among major U.S. companies and financial firms.

Cryptocurrencies have already made a mark in the world of digital art.

A digital artwork – “Everydays – The First 5000 Days” by American artist Mike Winkelmann who is better known as Beeple – sold for nearly $70 million at Christie’s in March, in the first ever sale by a major auction house of a piece of art that does not exist in physical form.

Coinbase said its partnership with Sotheby’s could pave the way for further adoption of cryptocurrency across the bidding house’s auctions.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Saumyadeb Chakrabarty)

The Crypto Daily – Movers and Shakers – May 3rd, 2021

Bitcoin, BTC to USD, fell by 2.02% on Sunday. Reversing a 0.25% gain from Saturday, Bitcoin ended the week up by 15.22% to $56,605.0.

A bullish start to the day saw Bitcoin rise to an early morning intraday high $57,900.0 before hitting reverse.

Falling short of the first major resistance level at $58,400, Bitcoin fell to a mid-morning intraday low $56,050.0.

Bitcoin fell through the first major support level at $57,074 before briefly revisiting $57,300 levels.

Failing to move back into positive territory, Bitcoin fell back through the first major support level to end the day at sub-$57,000 levels.

The near-term bullish trend remained intact supported by the return to $58,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Polkadot rose by 1.39% to lead the way, with Binance Coin (+0.21%), Ethereum (+0.11%) also finding support.

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

Ripple’s XRP slid by 5.72% to lead the way down, with Chainlink ending the day down by 4.27%.

Bitcoin Cash SV (-2.17%), Cardano’s ADA (-1.84%) and Crypto.com Coin (-2.93%), and Litecoin (-2.86%) also struggled.

In the week, the crypto total market fell to a Monday low $1,778bn before rising to a Saturday high $2,229bn. At the time of writing, the total market cap stood at $2,208bn.

Bitcoin’s dominance rose to a Monday high 51.73% before falling to a Sunday low 48.76%. At the time of writing, Bitcoin’s dominance stood at 49.01%.

This Morning

At the time of writing, Bitcoin was up by 2.05% to $57,762.6. A bullish start to the day saw Bitcoin rise from an early morning low $56,574.0 to a high $58,279.0 before easing back.

Bitcoin broke through the first major resistance level at $57,653 early on.

Elsewhere, it was a bullish start to the day.

At the time of writing, Ethereum and Ripple’s XRP were up by 3.16% and by 3.07% respectively to lead the way.

BTCUSD 030521 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall back through the first major resistance level at $57,653 to bring the second major resistance level at $58,702 into play.

Support from the broader market would be needed for Bitcoin to breakout from the morning high $58,279.0.

Barring an extended crypto rally, the second major resistance level would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at $60,000 before any pullback. The third major resistance level sits at $60,552.

A fall back through the first major resistance level would bring the pivot at $56,852 and the first major support level at $55,803 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of sub-$55,000 levels. The second major support level at $55,002 should limit the downside.

Buy Crypto with Binance

The Crypto Daily – Movers and Shakers – May 2nd, 2021

Bitcoin, BTC to USD, rose by 0.25% on Saturday. Consolidating Friday’s 7.59% gain, Bitcoin ended the day at $57,774.0.

A bullish start to the day saw Bitcoin rise to an early morning intraday high $58,326.0 before hitting reverse.

Falling short of the first major resistance level at $59,260, Bitcoin fell to a mid-afternoon intraday low $57,000.0.

Steering clear of the first major support level at $54,534, Bitcoin revisited $57,900 levels before easing back.

The near-term bullish trend remained intact supported by the return to $58,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Binance Coin (-0.43%), Cardano’s ADA (-0.13%), and Crypto.com Coin (-2.35%) saw red to buck the trend on the day.

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

Bitcoin Cash SV rallied by 12.35% to lead the way, with Chainlink and Ethereum seeing gains of 8.13% and 6.20% respectively.

Litecoin (+1.99%), Polkadot (+0.89%, and Ripple’s XRP (+3.31%) also avoided the red.

In the current week, the crypto total market fell to a Monday low $1,778bn before rising to a Saturday high $2,229bn. At the time of writing, the total market cap stood at $2,188bn.

Bitcoin’s dominance rose to a Monday high 51.73% before falling to a Saturday low 49.10%. At the time of writing, Bitcoin’s dominance stood at 49.24%.

This Morning

At the time of writing, Bitcoin was down by 0.43% to $57,527.0. A mixed start to the day saw Bitcoin rise to an early morning high $57,900.0 before falling to a low $57,461.0.

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

Elsewhere, it was a mixed start to the day.

Binance Coin (+0.79%), Crypto.com Coin (+0.89%), and Polkadot (+0.19%) found early support to buck the trend.

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

At the time of writing, Ripple’s XRP was down by 1.55% to lead the way down.

BTCUSD 020521 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to move back through $57,700 pivot to bring the first major resistance level at $58,400 into play.

Support from the broader market would be needed for Bitcoin to break back through to $58,000 levels.

Barring an extended crypto rally, the first major resistance level and Saturday’s $58,326 would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at $60,000 before any pullback. The second major resistance level sits at $59,026.

Failure to move back through the $57,700 pivot would bring the first major support level at $57,074 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of sub-$56,000 levels. The second major support level at $56,374 should limit the downside.

The Crypto Daily – Movers and Shakers – May 1st, 2021

Bitcoin, BTC to USD, rallied by 7.59% on Friday. Reversing a 2.36% loss from Thursday, Bitcoin ended the month down by 1.98% to $57,630.0.

A mixed start to the day saw Bitcoin fall to an early morning intraday low $53,068.0 before making a move.

Steering clear of the first major support level at $52,221, Bitcoin rallied to a late intraday high $57,611.0.

Bitcoin broke through the first major resistance level at $55,066 and the second major resistance level at $56,567.

Falling short of $58,000 levels, however, Bitcoin eased back to end the day at sub-$57,600 levels.

The near-term bullish trend remained intact supported by the return to $57,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Polkadot bucked the trend, falling by 5.80%.

It was a bullish end to the month for the rest of the majors, however.

Ripple’s XRP rallied by 14.39% to lead the way.

Binance Coin (+3.89%), Bitcoin Cash SV (+5.96%), Cardano’s ADA (+3.68%), Chainlink (+4.65%), Crypto.com Coin (+5.32%), and Litecoin (+6.30%) also made solid gains.

Ethereum (+0.64%) trailed the front runners, however.

For the month of April, it was a mixed month for the majors.

Crypto.com Coin joined Bitcoin in the red, with a 6.49% loss.

It was a bullish month for the rest of the majors, however.

Ripple’s XRP and Binance Coin surged by 180.63% and by 106.01% respectively to lead the way.

Bitcoin Cash SV (+36.87%), Chainlink (+29.83%), Ethereum (+44.61%), and Litecoin (+37.93%) also found particularly strong support, with Cardano’s ADA gaining 13.61%.

Polkadot saw a modest gain of 0.22%, however.

In the current week, the crypto total market fell to a Monday low $1,778bn before rising to a Friday high $2,193bn. At the time of writing, the total market cap stood at $2,154bn.

Bitcoin’s dominance rose to a Monday high 51.73% before falling to a Thursday low 49.18%. At the time of writing, Bitcoin’s dominance stood at 50.28%.

This Morning

At the time of writing, Bitcoin was up by 0.28% to $57,794.0. A mixed start to the day saw Bitcoin fall to an early morning low $57,350.0 before rising to a high $57,930.0.

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

Elsewhere, it was a mixed start to the day.

Crypto.com Coin (+0.36%), Litecoin (+0.46%), and Polkadot (+0.22%) joined Bitcoin in the green early on.

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

At the time of writing, Binance Coin was down by 0.77% to lead the way down.

BTCUSD 010521 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid the $56,164 pivot to bring the first major resistance level at $59,260 into play.

Support from the broader market would be needed for Bitcoin to break out from $58,500 levels.

Barring an extended crypto rally, the first major resistance level and resistance at $60,000 would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at the swing hi $64,829. The second major resistance level sits at $60,890.

Failure to avoid a fall through the $56,164 would bring the first major support level at $54,334 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of sub-$54,000 levels. The second major support level sits at $51,438.

The Crypto Daily – Movers and Shakers – April 30th, 2021

Bitcoin, BTC to USD, fell by 2.36% on Thursday. Following on from a 0.33% decline on Wednesday, Bitcoin ended the day at $53,566.0.

A bullish start to the day saw Bitcoin rise to an early morning intraday high $55,222.0 before hitting reverse.

Falling short of the first major resistance level at $56,222, Bitcoin slid to a late intraday low $52,377.0.

The sell-off saw Bitcoin fall through the first major support level at $53,707 and the second major support level at $52.554.

Finding late support, however, Bitcoin broke back through the second major support level to end the day at $53,500 levels.

The near-term bullish trend remained intact supported by the partial recovery to $55,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Binance Coin and Polkadot rose by 6.60% and by 8.49% respectively to lead the way.

Chainlink (+0.59%), Ethereum (+0.27%), and Ripple’s XRP (+2.90%) also found support.

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

Bitcoin Cash SV (-0.73%), Cardano’s ADA (-2.37%), Crypto.com Coin (-1.01%), and Litecoin (-1.27%) joined Bitcoin in the red.

In the current week, the crypto total market fell to a Monday low $1,778bn before rising to a Wednesday high $2,124bn. At the time of writing, the total market cap stood at $2,013bn.

Bitcoin’s dominance rose to a Monday high 51.73% before falling to a Thursday low 49.20%. At the time of writing, Bitcoin’s dominance stood at 49.45%.

This Morning

At the time of writing, Bitcoin was down by 0.59% to $53,250.0. A mixed start to the day saw Bitcoin rise to an early morning high $53,638.0 before falling to a low $53,068.0.

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

Elsewhere, it was a bearish start to the day.

At the time of writing, Binance Coin and Crypto.com Coin were down by 1.73 and by 1.77% respectively to lead the way down.

BTCUSD 300421 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to move through the $53,722 pivot to bring the first major resistance level at $55,066 into play.

Support from the broader market would be needed for Bitcoin to break out from $54,500 levels.

Barring an extended crypto rally, the first major resistance level and Thursday’s high $55,222.0 would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at $58,000 before any pullback. The second major resistance level sits at $56,567.

Failure to move through the $53,722 would bring the first major support level at $52,221 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of the second major support level at $50,877 and the 23.6% FIB of $50,473.

Bitcoin Recoups Recent Losses While Ethereum Breaks To New Highs

BTC futures traded up moderately today, gaining 2% in value, closing at approximately $56,600. More impressive is the close effectively above the 50-day moving average after closing below it on April 22nd. This short four-day period marked the first occurrence of pricing below this technical indicator since October 9th.

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On a weekly candlestick chart, you can clearly see that Bitcoin futures basically recouped all the losses of last week, although Bitcoin failed to re-enter the upward channel that took it past $65,000 nearly three weeks ago. Our outlook right now is cautiously bullish.

Ethereum, on the other hand, is looking fully bullish and has been on the rise. Ethereum, the world’s second-largest crypto by market cap, has gained nearly 14% in value in the last seven days, compared to Bitcoin, which gained nearly 2% in the same period. The second place in terms of Market capitalization is by a wide margin, Ethereum’s $310,000,000,000 next to Bitcoin’s $1,000,000,000,000 may be small, but in terms of 24-hour spot volume, it’s a lot closer of a call, with Ether’s numbers at $33 Billion and Bitcoin’s 24 hr. trading volume not too much higher at $46 billion.

wewdnesday #3

ETH has been more resilient than BTC during this last correction where ETH just continued higher to make new record highs, currently trading above $2,700 for the first time in history. Ethereum looks poised to tackle $3,000 by the end of the summer.

Bitcoin Price Spike: How To Buy Into This?

Is this the norm? It is tough to define “norm” for Bitcoin, but none the less, the 51,300 entry price was taken out and Bitcoin has been gyrating around 54 to 55K ever since.

So if you missed this swing trade, what is the best way to adjust and prepare for the next buying opportunity? And why not buy it now?

Let me answer the second question first: we don’t buy now for a swing trade because we don’t chase moves where the reward/risk is no longer attractive. It is that simple. If price continues higher from here, it does so without us because we focus on risk and sometimes that means letting a trade go. Effective risk management is what leads to consistency, NOT big wins.

As far as preparing for the next buying opportunity: IF Bitcoin can retrace to the 52500, to 53500 area and produce a bullish reversal, that would be a higher low. Risk can be clearly defined off of such a structure and we will be prompted to share a new swing trade long idea if the scenario materializes.

A more extreme bullish scenario would be a test of the 48K area a second time which would be a potential double bottom (similar to Gold off of 1675). IF a bullish reversal can materialize here, it would be an even more attractive swing trade long idea in terms of reward/risk.

It is also possible that Bitcoin gyrates within a very tight range around 55K for a few days while establishing a momentum continuation pattern to go higher. In this situation we will be open to taking on a new swing trade long, but it will be categorized as an aggressive trade since the location is less than ideal. In this scenario, at least there is a pattern to define risk from.

I just presented the main criteria that price needs to meet before we consider assuming any new risk. In other words, we take positions based on rules, not feelings, opinions or reactions to information. If Bitcoin does not align with the rules, whether it runs or not, we do not put on any new risk. Rules promote consistency.

If you would like to learn more about our analysis, perspective and signal service, visit here.

The Crypto Daily – Movers and Shakers – April 28th, 2021

Bitcoin, BTC to USD, rose by 1.76% on Tuesday. Following a 10.12% rally on Monday, Bitcoin ended the day at $55,044.0.

A mixed start to the day saw Bitcoin fall to an early morning intraday low $53,304.0 before making a move.

Steering clear of the first major support level at $50,493, Bitcoin rallied to a late intraday high $55,437.0.

Falling short of the first major resistance level at $56,049, however, Bitcoin eased back to sub-$55,000 levels before ending the day at $55,000 levels.

The near-term bullish trend remained intact supported by the partial recovery to $55,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Bitcoin Cash SV rallied by 10.87% to lead the way.

Binance Coin (+6.29%), Cardano’s ADA (+5.57%), Chainlink (+4.62%), Crypto.com Coin (+5.11%), Ethereum (+5.31%), and Litecoin (+5.12%) also found strong support.

Polkadot (+2.35%) and Ripple’s XRP (+2.94%) trailed the front runners, however.

Early in the week, the crypto total market fell to a Monday low $1,778bn before rising to a Tuesday high $2,078bn. At the time of writing, the total market cap stood at $2,057bn.

Bitcoin’s dominance rose to a Monday high 51.73% before falling to a Tuesday low 49.94%. At the time of writing, Bitcoin’s dominance stood at 50.27%.

This Morning

At the time of writing, Bitcoin was up by 0.39% to $55,260.0. A mixed start to the day saw Bitcoin fall to an early morning low $55,010.0 before rising to a high $55,298.0.

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

Elsewhere, it was a mixed start to the day.

Polkadot was down by 0.34% to buck the trend early on.

It was a bullish start for the rest of the majors, however.

At the time of writing, Ripple’s XRP was up by 1.38% to lead the way.

BTCUSD 280421 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall through the $54,595 pivot to bring the first major resistance level at $55,886 into play.

Support from the broader market would be needed for Bitcoin to break out from $55,500 levels.

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

In the event of an extended crypto rally, Bitcoin could test resistance at $57,000 before any pullback. The second major resistance level sits at $56,728.

Failure to avoid a fall through the $54,595 would bring the first major support level at $53,753 into play.

Barring another extended sell-off on the day, Bitcoin should steer well clear of the 23.6% FIB of $50,473. The second major support level at $52,462 should limit the downside.

Bitcoin and Ethereum Price Seeks to Recover Lost Grounds After Market’s Flash Crash

Both Bitcoin and Ethereum traded at a weekly low of $47,159.49, and $2,060.14 respectively. These price levels were surreal as prices had not gone that low since early March.

With the market held down in the oversold region for days, the news that America’s oldest wine brand Acker now accepts Bitcoin and Ethereum payments is perhaps adding to fuel the current bullish market outlook.

Bitcoin Fighting the $54,000 Resistance Level

Despite its 2.57% gain in the past 24 hours to $54749.8 according to data from CEX.IO price feed, Bitcoin bulls are coming off as weary of the $54,000 resistance level. The top for the digital currency to reclaim is its all-time high of $64,863.10 attained close to two weeks ago, however, the fear of rejection is slowing the ambitious push beyond the current levels.

The Technical indicators including the Moving Average and the Chaikin Money Flow are both not oblivion of the regained strides on the BTC/USD 4 hour chart. While the resurgence is obvious, Bitcoin still has a lot of push to erode the downward slide of the 9-day Moving Average. A consistent move upward will return Bitcoin’s price back to $60,000 in the short term.

Ethereum Pushes for New Price Zones

Ethereum’s recovery has been daunting, gaining 2.24% to trade at $2544.83. Retail sentiments remain high, while on-chain data reveals investors are not giving up on the future potentials of the Proof-of-Stake (PoS) network as total deposits top $9 billion.

At present, ETH is trading above its 6 and 20-day Moving Averages, making a case for a further upsurge in the near term. With the ATH of $2,641.09 the target in the short term, Ethereum bulls are potentially aiming for a new price territory above $3,000 in the medium to long term.

Konstantin Anisimov, Executive Director at CEX.IO

The Best Trades For The Green Energy Revolution

The great bond bull market of the past 40 years has made millionaires out of many, so has the rise of blockchain, cryptocurrencies and the digitalization of the financial system. Another such paradigm shift upon us is the worlds unified move to decarbonize and green the economy.

What we are witnessing is a worldwide push for industries to move away from excessive greenhouse gas (GHG) emissions. Such unification around a common goal is perhaps unlike anything we have witnessed in the entire history of humanity. With governments and companies worldwide fully committing to the green transition and most aiming for net-zero emissions by the middle of this century, many are taking several significant steps to achieve this goal.

The move from internal combustion engines to electric vehicles (EVs) is the most obvious and popularized move thus far. For example, the EU has announced a target of 30 million electric vehicles by 2030, Britain plans to ban the sale of new traditionally powered petrol and diesel engines by 2030 and so too are the Japanese. California is also adopting a similar goal. Likewise, the automakers themselves are largely embracing the change as they realistically have no option but to do so. Ford, Jaguar and Volvo are some such examples. What is abundantly clear is the climate change goals of nations are no longer within the realm of speculation; the transition is real and it is coming, whether we are prepared or not.

People are now far more open-minded, educated, and aware of the potential damage to both our environment and our economy that global warming can unleash. Our world leaders and notably the Biden Administration are agreeing there is much to be done to green the economy. This is a huge task and is occurring from a global, country, sovereign and individual level. Whilst the evidence above suggests most of the action thus far has centered around the use of electric vehicles and renewable energies, the process of electrifying everything is enormous in scope. Upstream, midstream, and downstream; the way we generate, transport, store and use energy must be revolutionized.

The green energy transition is a once-in-a-lifetime paradigm shift that we can trade and profit from. Much will change during this generational transformation.

Copper

Copper and other metals used in the electrification process are undoubtedly a popular way to trade the green energy transition. Regardless of the rapid price appreciation in such metals over the past 12 months, there are abundant reasons why so many investors are bullish over the long-term. The role these metals will play in the green energy transition is so very important.

Front and center of the electrification metals sits copper; perhaps the biggest winner of the green transition. Its role is critical in all aspects of the push to electrify the economy. With the world’s motor vehicles set to become almost completely electrified over the coming decades and coppers use therein being three to fourfold relative to traditional vehicles, we are going to need a lot of copper.

According to the International Copper Association (ICA), a battery-powered electric vehicle (BEV) uses 83 kg of copper, a hybrid electric vehicle 40kg and an internal combustion engine only 23kg of copper. From just the transition to electric vehicles alone, the demand for copper is set to increase three to four times from its current levels. Indeed, the ICA predicts the number of electric vehicles will rise to 27 million by 2027, a nine-fold increase from the roughly 3 million as of 2017. Such an increase is set to increase copper demand for the production of EVs from 185,000 tons to 1.74 million tons.

Source: International Copper Association - The Electric Vehicle Market and Copper Demand
Source: International Copper Association – The Electric Vehicle Market and Copper Demand

Based solely on the adoption of electric vehicles, we can clearly see the demand for copper is set to increase dramatically over coming decades. What’s more, such projections as those of the ICA are modelled only on coppers use within EVs, the green energy transition will require an immense amount of copper for much more than just its use within electric vehicles.

Indeed, according to the ICA, electric vehicle chargers themselves will require from around 0.7 kg up to 8 kg each, equal to an additional 216,000 tons of copper demand by 2027. Additionally, the adoption of renewable energy sources such as wind and solar are heavily dependent on the use of copper n their construction. According to the Breakthrough Institute, a California based environmental research center, “wind energy requires on average 2,000 tons of copper per gigawatt, whilst solar needs 5,000 tons per gigawatt – several times higher than fossil fuels and nuclear energy”.

The graphic below illustrates coppers use in the generation of electricity from conventional methods compared to wind and solar. Copper will be required to a significant degree in all forms of renewable energy generation.

Source: Kutcho Copper
Source: Kutcho Copper

A hugely underappreciated and at this stage seemingly underfunded part of the green transition for many developed countries, notably the US, is the need to rebuild, or at the very least significantly improve their electrical grid. For the most part, the electrical grid does not have the ability to store electrical energy. One of the major issues with wind and solar-generated power is their intermittency, that is, their inability to constantly generate power. The sun is not always shining nor is the wind always blowing. Thus, the ability to be able to store the electrical energy created from such sources for future use becomes paramount.

What’s more, the United State’s electric grid as is currently constructed is not able to provide and transmit the necessary electricity to power an entirely electrified economy. If the majority of the population came home from work in the evening and were to plug their EVs in to charge, the grid would simply be unable to support such demand and would shut down. In some parts of the US, the electrical grid is nearly a century old. It was designed and built from a completely different era. Those living in Texas can no doubt attest to the limitations of the grid.

Rebuilding the electric grid will require astronomical amounts to copper and other important metals. The importance of this enormous task will only become more prevalent in the minds of policymakers as we continue down the road to electrification.

What makes copper so useful is its ability to conduct electricity and transmit heat. It is roughly twice as conductive as aluminum, making it far more efficient in its use. Copper is the primary source of conductors in wires and cabling, electrical equipment and renewable energy infrastructure. Whilst silver is another such metal that can serve a similar purpose, it is simply too expensive and not as abundant.

Precious metals aside, pound-for-pound copper is the best conductor of electricity and heat. It is also one of the few commodities that cannot be feasibly replaced by any alternatives in the electrification process in the way that battery technology is susceptible to innovation. Additionally, copper itself is also renewable and is one of only a few materials that is fully recyclable.

Also favoring copper is its long-term supply dynamics. In spite of this huge forthcoming growth in copper demand, copper itself is notoriously difficult to source. As detailed by energy and commodity experts Leigh Goehring and Adam Rozencwajg in their Q4 2020 market commentary; “a structural deficit has crept into global copper markets that will become increasingly obvious to investors as the decade progresses. Confronting this strong demand is copper mine supply that will show little in the way of growth over the next five years.

Few large copper mining projects are slated to come online over the next five years”. They also note that “the lack of massive new copper mining projects, coupled with an ever-accelerating copper mine depletion problem, means growth in mine supply should remain minimal over the next five years. Global copper consumption exceeds copper mine supply and recovered copper scrap by about 500,000 tons per year presently and will get worse”.

Whilst an increase in the price will of course lead to further capital injected into the sector to source further supply, the process of getting this new supply online to meet demand is not as simple as it may appear. Clearly, there is a structural supply shortage of copper. This presents an incredibly favorable demand and supply dynamic for copper over the comin years, one in which the copper price and the miners themselves will benefit enormously.

Finally, turning to the technicals, lovers of a long-term chart will find it hard not to appreciate the recent bullish breakout from copper’s near two-decade wedge pattern.

Source: StockCharts.com
Source: StockCharts.com

Whilst much of the rapid price appreciation we have seen over the past 12 months can somewhat be attributed to the COVID-19 lockdown induced supply shortages and rampant speculation, it is important to remember this is a long-term trade. Though the immediate risk-reward may not be as attractive, any significant dips in the price of copper and the copper miners should be bought with earnest for those who believe in the long-term viability of this trade, as I do.

Copper and copper miners are the simplest long-term play on the green energy transition.

Uranium

With so much focus and capital being directed towards renewable sources of energy in wind and solar, there is relatively little thought given to the limitations of these as sources of clear energy. Due to such limitations I will endeavor to detail below, herein lies the inevitability of nuclear power’s role in electricity generation as we progress through this green revolution.

The limitations of renewables

Whilst renewable energies will play a significant and important role in the green energy transition, they are not the panacea for carbon reduction as one might initially believe. There are significant limitations to the sole use of renewables as a means to reach net-zero emissions.

Both solar and wind are inefficient generators of electricity. This is primarily a result of their intermittency and energy density, as I have only briefly touched on. According to Goehring and Rozencwajg, who have also released some excellent research on the limitations of renewables, note that a standard solar panel is likely to only generate between 12-20% of its capacity due to intermittent sunshine, whilst a wind turbine is only marginally better at around 25% due to the intermittency of wind.

Goehring and Rozencwajg have developed a metric to track the efficiency of energy generation from its various sources, measured as Energy Return On Energy Invested (EROEI), estimating that between 25-60% of the energy generated by renewable sources is consumed internally by the process of actually generating that electricity, meaning the EROEI for renewables is roughly 3 to 1. Compare this to a traditional gas plant, whose EROEI is around 30 to 1, meaning that it internally consumes only 3% of its generated energy. Traditional and less carbon friendly sources of energy are roughly 30 times more efficient in their energy generation compared to renewables.

What’s more, due to the inefficiency of renewables and their need of servicing and maintenance, which in itself is quite impactful on carbon emissions, in addition to the need to overbuild solar and wind farms as well as the ability to store the energy to counter their intermittency, has largely resulted in those countries who have adopted renewables to a significant degree not seeing the reduction in carbon emissions they would have hoped for.

Source: Goehring & Rozencwajg - Ignoring Energy Transition Realities
Source: Goehring & Rozencwajg – Ignoring Energy Transition Realities

As we can see above, much of the gains toward a green economy made by the adoption of renewables will be offset by their inefficiencies and the additional energy requirements to maintain the infrastructure and store their sourced energy. Few people understand how energy intensive the green transition will be.

Whilst they will play an important role in the green energy transition, renewables will not solve problem of global warming to the degree that is desired. This leads to nuclear power, one of the few solutions able to provide the carbon-free, base load power required.

Why uranium?

Uranium is the fuel that powers nuclear reactors which then generates power. Nuclear power is generally misunderstood. On the whole, it is a clean, safe and reliable source of of base-load energy.

If we return to Goehring and Rozencwajg’s Energy Return On Energy Invested (EROEI), “a modern nuclear reactor generates electricity with an EROEI of nearly 100 compared with 30 for gas and 1-4 for renewables. As a result, only 1% of the generated electricity is consumed internally compared with 3% for gas and 25-60% for renewable energy”.

Compared with renewables, nuclear energy is anywhere from 40-100 times more efficient. What’s more, nuclear energy is far more scalable than renewables and completely avoids their intermittency shortcomings. The green energy transition simply must have an increased reliance on nuclear energy, it is one of the few sources of clear energy that has the ability to drive the green energy transition in an efficient way.

Not only is nuclear energy the most efficient source of electricity generation, but it is also less carbon intensive than renewables.

Source: Sachem Cove Partners
Source: Sachem Cove Partners

Perhaps the biggest reason behind the lack of reliance on nuclear as a source of energy is the negative sentiment towards it. Nuclear energy certainly gets a bad wrap. There have been three significant nuclear incidents responsible for this; Three Mile Island, Chernobyl and Fukushima. Despite the actual loss of life being surprisingly less than one might have thought, these incidents have largely left the industry bereft of capital and acceptance as a source of energy over the past 40 or so years. However, what will likely surprise many is that nuclear energy is actually the safest form of electricity.

Source: Sachem Cove Partners
Source: Sachem Cove Partners

The use of uranium within nuclear energy does have somewhat of a dark history. The uranium cycle of nuclear energy creation, as opposed to using the thorium cycle, was chosen as the by-product of creating electrical energy using uranium is plutonium, which was used to make nuclear weapons.

The reasoning behind this choice was because the heyday of nuclear energy occurred during the Cold War, and it was the agenda’s of the worlds governments to create nuclear weapons. However, the Cold War has long since past. It is now time for policy makers to revisit the use of nuclear energy within their climate goals. Indeed, this negative view towards nuclear energy has created a huge mispricing for the sector. The math no longer is equal to the narrative.

Convincing environmentalists that the positive impacts of nuclear energy do indeed significantly outweigh the negative impacts will likely be a game-changer for how the world produces energy. Likewise, an education of the general public is needed in regards to nuclear energy. We cannot meet our climate objectives without nuclear energy in the mix.

Indeed, we now are seeing sentiment towards nuclear slowly begin to change. The pressure of governments to meet their green energy objectives will ultimately lead to nuclear power having an ever increasing role as a source of carbon free base-load energy. On the whole, nuclear energy is actually very clean, safe and reliable. Nuclear energy simply must be a part of policy makers plans should they wish to achieve their green objectives.

The industry fundamentals for nuclear energy and uranium is quite different to most other commodity and energy markets. As the sector has been in a bear market since the Great Financial Crisis, it has largely been bereft of capital. This seemingly paints a positive picture for the price going forward. Due to the lack of capital and investment, there is very little in the way of new production set to come online in the next few years in order to meet the increasing demand for uranium. This lack of new capital has been beneficial for the sector, as only the strongest, most profitable and best-run producers have survived.

Likewise, the production of uranium is a highly concentrated industry, with the two largest miners, Kazatomprom in Kazakhstan and Cameco in Canada, accounting for roughly 60% the the worlds uranium production. With both producers significantly reducing their production over the past 12 months due to COVID-19, a structural supply shortfall could well be with us for years to come so long as nuclear energy becomes a significant part of the green energy transition. Furthermore, what could result from such supply shortfalls is the producers themselves entering the spot market in order to fulfill their supply obligations to the various reactors; a bullish outcome to be sure.

From a technical perspective, the spot uranium price appears to be finally bottoming after its prolonged bear market.

Source: TradingEconomics.com
Source: TradingEconomics.com

Due to how the industry contracts uranium supply between producers and users, the spot price is perhaps not the most relevant and is a very thinly traded market. For me, I am happy to invest via the URNM ETF, which is superior to the older URA ETF. URA is more of a nuclear energy ETF than a play on uranium, and as a result there are many constituents of the fund which makes little sense as they are not related to the production of uranium. URNM is a better vehicle for those looking for a purer exposure to the uranium miners.

However, similar to copper, it is important to keep in mind the uranium trade is for those with a long-term time horizon. Given the near doubling of the price of both URA and URNM since the reflation trade took off in November of last year, the risk-reward for the immediate-term is perhaps skewed to the downside. Of course any significant pullbacks should be bought in earnest for all those who buy into the long-term bull case for uranium, as I do. The 38.2% Fibonacci retracement of the Novembers lows looms as one such attractive entry point.

Source: StockCharts.com
Source: StockCharts.com

The case for uranium is simple; nuclear energy will ultimately be required in order for governments to meet their carbon goals.

European Carbon Credits

What are European Carbon Credits?

European carbon credits, or perhaps what are more accurately defined as carbon allowances, are part of the European Union’s Emissions Trading Scheme, or EU ETS. The EU ETS is at its core, a market-based approach to controlling carbon emissions introduced by the EU as the cornerstone of their efforts to control emissions and meet their carbon goals. The Emissions Trading Scheme is what’s referred to as a ‘cap and trade’ system, which attempts to set a maximum limit of emissions certain companies and industries involved in the scheme are allowed to emit during a certain period of time. The EU ETS is the worlds first and largest ‘cap and trade’ system aiming to reduce GHG emissions.

The system works by setting an emissions cap and issuing a certain number allowances, which are referred to as EU Emissions Allowances (EUAs). The cap is set by the EU, and all the companies within the scheme are required to accumulate a certain amount of allowances (EUAs) for every ton of CO2 they emit each year. These allowances are issued via auction each year (or issued for free to various industries where there is considered to be a potential risk if they were required to pay the full cost of the allowances they need to cover their emissions), and are tradable between companies. At the end of each year, the participants are required to return an allowance for every ton of CO2 they emitted during that year.

Those companies who were unable to accumulate a sufficient number of allowances to cover their emissions (i.e. the more carbon intensive industries), are required to reduce their emissions or buy surplus allowances from companies whose allowances exceed their carbon emissions during the period. These surplus companies are also allowed to accumulate their unused allowances for use in later years.

The following graphic provides a helpful illustration of how the system works.

Source: EU ETS Handbook
Source: EU ETS Handbook

For those companies who fail to accumulate sufficient allowances or reduce their emissions accordingly, they face a fine of approximately 100 euros per excess ton of carbon emitted, as well as being required to accumulate allowances in future years to cover those not covered in past years. The system is structured such that there are significant penalties for the participants who do not meet the emissions goals.

The benefits of using a ‘cap and trade’ system as a means to meet carbon emissions goals is it allows the market to determine how the emissions can be reduced at the lowest cost to consumers and to the economy. What this means is the price of carbon is effectively set through the market via the supply and demand for allowances. Relative to more traditional methods of simply taxing carbon emitters, a ‘cap and ‘trade’ system offers far more flexibility and efficiency, resulting in carbon emissions being cut by companies and industries who will incur the smallest cost for doing so.

First launched in 2005 as a pilot program, the Emissions Trading Scheme is now in its fourth stage, and has undergone several changes throughout its history. Phase 1 (2005-2007), was the testing phase where too many allowances were issued, resulting in the price effectively falling to zero. This oversupply was partly driven by the companies themselves overestimating their carbon emissions on purpose, allowing them access to a greater number of allowances.

Phase 2 (2008-2012), was similarly driven by an oversupply of allowances from Phase 1, and coincided with the Great Financial Crisis, both working to keep prices down. Phase 3 (2012-2020) on the other hand worked to reduce the supply and increase the amount or participants. Phase 3 has been very successful and has established the EU ETS as one of the worlds most effective measures to combat carbon emissions. The system is set to further reduce supply and increase participants throughout Phase 4 (2021 and beyond).

What is important to note in regards to Phases 3 and 4 is the number of allowances available has been declining, along with the number of participants who were previously entitled to free credits is declining, and finally, the number of industries and countries included as part of the scheme is increasing. As it stands, 27 countries within the European Union are part of the scheme, along with non-EU countries Norway, Liechtenstein and Iceland. As I will touch on the in following section, the supply and demand dynamics for the scheme indicates the prices of these allowances is heavily skewed to the upside.

Demand and supply dynamics

The current supply of allowances is what’s referred to as the Total Number of Allowances in Circulation, or TNAC. This is currently set at around 1.4 billion tons of carbon emissions annually. The emissions targets of the scheme is a reduction of emissions by 43% relative to the 2005 levels when the system was initiated. This implies a linear reduction in emissions of 2.2% annually from 2020 to 2030. The TNAC will reduce accordingly in line with the targeted reduction in emissions. Simply put, the supply of allowances will reduce each year.

This creates a simple dynamic within the scheme; a reduction of supply coupled with an increase in demand. The system is skewed towards higher prices. The brilliance of the scheme is it creates incentives for higher prices of the allowances for almost everyone involved. The higher the price (i.e. the higher cost of emitting carbon), the greater the incentive for companies to own credits and thus fewer greenhouses gases are emitted. What’s more, the governments not only have an environmental incentive for higher prices, but as a result of the sovereign governments of the many nations involved in the scheme being the ones who actually distribute the allowances to the participating companies, they directly receive revenue via the auctions for doing so. Again, higher prices equals higher revenue.

To a certain extent, the allowances themselves are being viewed by the participants as a store of value. They are aware the prices are going to rise, they are aware the supply of allowances is going to continue to fall, and they are required to all hold enough allowances to conduct their business as it stands. There is little incentive to sell. Analyzing this supply and demand dynamic from a stock-to-flow perspective as one would gold, bitcoin or other scarce assets again presents a favourable outlook for the price. What’s more, unlike gold or bitcoin, it is in the governments best interests to see the prices rise. The system is being championed by government policy as opposed to an alternative to government policy.

To give some idea of how the supply and demand dynamics of the scheme are set to work within the coming years, Lawson Steele of Berenberg Bank, one of the worlds leading experts on the EU ETS, projects a cumulative supply shortfall of around 99% by 2024! If such projections were to modestly prove true, there is huge upside of the price of allowances in the coming years.

However, it must be noted the EU is somewhat cautious of a too-rapid increase in price, and do have measures in place to combat such a rapid price rise if it were to be too damaging for the companies involved in the ETS. Should it be deemed necessary, the policy makers will (attempt) to intervene via what is known as the Market Stability Reserve (MSR), as well as there ability to alter the supply of allowances as defined by Article 29a of the ETS.

The MSR is basically a feature of the system that helps to control over an oversupply or undersupply of allowances. Introduced in 2019, the MSR works to reduce the supply (i.e. the TNAC) when there is an abundance of allowances, and increase the TNAC when there is a potentially harmful allowances deficit. The idea behind the MSR is to allow prices to rise in a smooth fashion with minimal volatility.

Likewise, Article 29a of the scheme’s directive obliges the policy makers to monitor the supply and demand dynamics and intervene by reducing or increasing supply should this be deemed necessary. Whilst the purpose of Article 29a is again to try to ensure prices rise in an orderly manner, the actual rules therein are cloudy in nature and very much open to interpretation. What’s more, the many different sovereign’s involved will want different prices depending on their industries included in the ETS, thus creating somewhat of a potential conflict of interest between participants and thereby increasing the difficulty of intervention via Article 29a.

Whilst the biggest risk is an excessive rise in prices to the point whereby policy makers deem it appropriate to intervene, such a risk could be considered immaterial given that prices must rise in the first place to warrant such intervention. To be clear, the policy makers most certainly want higher prices. These measures are more so designed to achieve those higher prices in an orderly manner. At the end of the day, the priority of the scheme is to reduce GHG emissions, and if the price must rise to achieve this then so be it.

Technicals and ways to trade

Capping off the bull case for the EU carbon allowances are the technicals. The allowances themselves can be traded in the futures market. This futures market of EUA’s has a near $300 billion market cap with a significant level of liquidity.

From a long-term technical perspective, the recent breakout of the decade plus basing pattern remains immensely bullish.

Capture.PNG

The allowances can also be traded via the KRBN and GRN exchanges traded funds. The KRBN ETF is made up of roughly 70-80% of EU allowances, with the remaining constituents being that of other, smaller Emission Trading Schemes over the world. The GRN ETF, which is smaller than KRBN, trades nearly exclusively off the EUA futures. I have positions in both ETF’s and intend on adding more as attractive opportunities present themselves. Though the price action over the past 12 months has been near parabolic and I would be more inclined to wait for a pullback of some sort before buying more, the supply and demand dynamics suggest further upside is ahead.

The EU ETS is Europe’s flagship way to meet its carbon goals over the coming years. There remains a vast amount of institutional money yet to make its way into this trade as the ESG incentives for pension funds and institutions to buys allowances will only grow. Remember, a higher price equal fewer emissions.

Final thoughts

What I have discussed here are my favourite trades for the green energy transition. I do not doubt there will be other investments who will benefit significantly over the coming years as the world moves to decarbonize. Whilst EV’s has certainly been the winners to date, the risk-reward for such a trade is not necessarily skewed to the upside as much as one would like.

Geothermal, battery technology and nickel are all themes in which I am sure will receive much investment and whose investors will likely benefit, along with many others.

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

Bitcoin Completes Decline After Lower Low and Strong Push Up

Bitcoin (BTC/USD) made a new lower low as expected in our previous Elliott Wave analysis. The strong bullish bounce could indicate the temporary end of the bearish pullback.

This article reviews how the uptrend might take shape in the next upcoming week.

Price Charts and Technical Analysis

Bitcoin 26.04.2021 4 hour chart

The BTC/USD chart is showing a complete 5 bearish waves down (orange) in wave 5 (grey) of wave A (pink). The alternative is an ABC (red) pattern down:

  1. A bullish ABC up could indicate a wave B (pink). In that case, another price swing down could be a wave C (pink).
  2. Considering the strength of the uptrend on the higher time frames, the pullback in wave C could be shallow.
  3. A 5 wave pattern (rather than an ABC) could indicate a wave 1 and wave 2 rather than B and C. This scenario is also bullish.
  4. An immediate push up (green arrow) is likely to test the resistance zone (orange box).
  5. A bearish bounce could decline to test the support (blue box) and inverted head and shoulders level.

On the 1 hour chart, price action is facing a key resistance trend line (orange) after a strong bullish impulse up. Considering the recent price action, the bulls seems to be back in control:

  1. The bearish wave 5 seems completed.
  2. The bullish price action is showing larger bullish candles with closes near the high, indicating bull control.
  3. Price action managed to break above and away from the 21 ema zone, which changed the angle of the 21 emas to up.
  4. Either a breakout (green arrow) or a bounce up after a pullback (orange and green arrows) is likely.
  5. The next target is the Fibonacci levels and resistance zone (red box).
  6. At resistance, price action could make a pullback (orange arrows) but a bullish continuation is expected (blue arrows).

Bitcoin 26.04.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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

Bitcoin and Ethereum – Weekly Technical Analysis – April 26th, 2021

Bitcoin

Bitcoin, BTC to USD, slid by 12.54% in the week ending 25th April. Following on from a 6.43% decline from the previous week, Bitcoin ended the week at $49,129.0.

A bullish start to the week saw Bitcoin rise to a Monday intraweek high $57,500.0 before hitting reverse.

Falling well short of the first major resistance level at $63,834, Bitcoin slid to a Saturday intraweek low $47,112.0.

The sell-off saw Bitcoin fall through the 23.6% FIB of $50,473 and the first major support level at $49,505 to end the week at sub-$49,200 levels.

6 days in the red that included a 4.77% slide on Wednesday and 3.80 % fall on Thursday delivered the downside for the week.

For the week ahead

Bitcoin would need avoid a fall back through the $51,247 pivot to support a run the first major resistance level at $55,382.

Support from the broader market would be needed for Bitcoin to break back through to $55,000 levels.

Barring an extended crypto rally, the first major resistance level and last week’s high $57,500.0 would likely cap any upside.

In the event of an extended breakout, Bitcoin could test resistance at $60,000 before any pullback. The second major resistance level sits at $61,635.

Failure to avoid a fall back through the $51,247 pivot would bring the 23.6% FIB of $50,473 and the first major support level at $44,994 into play.

Barring another extended sell-off, Bitcoin should steer clear of the 38.2% FIB of $41,592. The second major support level sits at $40,859.

At the time of writing, Bitcoin was up by 7.43% to $52,779.0. A bullish start to the week saw Bitcoin rise from an early Monday morning low $48,831.0 to a high $53,161.0

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

BTCUSD 260421 Daily Chart

Ethereum

Ethereum rose by 3.59% in the week ending 25th April. Following a 4.23% gain from the previous week, Ethereum ended the week at $2,322.16.

A mixed start to the week saw Ethereum fall to a Monday low $2,050.0 before making a move.

Steering clear of the first major support level at $1,978, Ethereum rallied to a Thursday intraweek high and a new swing hi $2,646.2 before hitting reverse.

Ethereum broke through the first major resistance level at $2,526 before sliding to a Friday intraweek low $2,040.0.

Finding support at the 23.6% FIB of $2,041, Ethereum revisited $2,380 levels before easing back. A bullish end to the week, delivered the upside for the week, however.

4-days in the green that included a 4.76% rally on Sunday delivered the upside in the week.

For the week ahead

Ethereum would need to avoid a fall back through the pivot at $2,336 to bring the first major resistance level at $2,632 into play.

Support from the broader market would be needed, however, for Ethereum to break back through to $2,600 levels.

Barring an extended crypto rally, the first major resistance level and last week’s swing hi $2,646.20 would likely cap any upside.

In the event of an extended breakout, Ethereum could test resistance at $3,000 before any pullback. The second major resistance level sits at $2,942.

Failure to avoid a fall back through the pivot at $2,336 would bring the 23.6% FIB of $2,041 and the first major support level at $2,026 into play.

Barring an extended sell-off in the week, Ethereum should steer clear of sub-$1,800 levels. The second major support sits at $1,730.

At the time of writing, Ethereum was up by 5.35% to $2,446.51. A bullish start to the week saw Ethereum rise from an early Monday low $2,306.03 to a high $2,490.00.

Ethereum left the major support and resistance levels untested at the start of the week.

ETHUSD 260421 Daily Chart

The Crypto Daily – The Movers and Shakers – April 26th, 2021

Bitcoin, BTC to USD, fell by 2.03% on Sunday. Following a 1.91% fall on Saturday, Bitcoin ended the week down by 12.54% to $49,129.0.

A mixed start to the day saw Bitcoin break through the 23.6% FIB to strike an early morning high $50,563.0 before hitting reverse.

Falling short of the first major resistance level at $51,291, Bitcoin fell to a late morning low $49,164.0.

While steering clear of the first major support level at $48,942, Bitcoin fell back through the 23.6% FIB of $50,473.

Finding late morning support, however, Bitcoin broke back through the 23.6% FIB to hit an intraday high $50,671.0.

Continuing to fall short of the first major resistance level, Bitcoin slid to a late intraday low $47,112.0.

Falling back through the 23.6% FIB, Bitcoin also fell through the first major support level at $48,942 and the second major support level at $47,722.

Steering clear of sub-$47,000 levels, however, Bitcoin broke back through the major support levels to end the day at $49,100 levels.

The near-term bullish trend remained intact in spite of the latest reversal. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Ethereum and Polkadot rallied by 4.78% and by 5.00% respectively to lead the way.

Binance Coin (+1.68%), Chainlink (+1.22%), and  Crypto.com Coin (+1.76%) also bucked the trend on the day.

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

Bitcoin Cash SV (-1.82%), Cardano’s ADA (-1.18%), Litecoin (-0.49%), and Ripple’s XRP (-1.88%) joined Bitcoin in the red.

It was also a mixed week for the crypto majors.

Binance Coin and Ethereum rose by 4.81% and by 3.60% respectively to buck the trend in the week.

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

Bitcoin Cash SV and Ripple’s XRP slid by 29.49% and by 26.97% respectively to lead the way down.

Cardano’s ADA (-14.67%), Chainlink (-19.02%), Crypto.com Coin (-13.09%), Litecoin (-18.24%), and Polkadot (-8.64%) also struggled, however.

In the week, the crypto total market rose to a Monday high $2,100bn before sliding to a Friday low $1,648bn. At the time of writing, the total market cap stood at $1,832.

Bitcoin’s dominance rose to a Tuesday high 54.32% before falling to a Thursday low 50.03%. At the time of writing, Bitcoin’s dominance stood at 51.18%.

This Morning

At the time of writing, Bitcoin was up by 2.13% to $50,173.8. A mixed start to the day saw Bitcoin fall to an early morning low $48,831.0 before rising to a high $50,439.0.

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

Elsewhere, it was a mixed start to the day.

Crypto.com Coin fell by 0.81% early on to buck the trend.

It was a bullish start for the rest of the majors, however.

At the time of writing, Ripple’s XRP was up by 5.25% to lead the way.

BTCUSD 260421 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall back through the $48,971 pivot to bring the 23.6% FIB of $50,473 and the first major resistance level at $50,829 into play.

Support from the broader market would be needed for Bitcoin to break out from $50,500 levels.

Barring an extended crypto rally, the first major resistance level and resistance at $51,000 would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at $53,000 before any pullback. The second major resistance level sits at $52,530.

Failure to avoid a fall back through the $48,971 would bring the first major support level at $47,270 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of sub-$45,000 levels. The second major support level at $45,412 should limit the downside.

The Crypto Daily – Movers and Shakers – April 25th, 2021

Bitcoin, BTC to USD, fell by 1.91% on Saturday. Following on from a 1.17% decline on Friday, Bitcoin ended the day at $50,161.0.

A mixed start to the day saw Bitcoin rise to an early morning intraday high $51,201.0 before hitting reverse.

Falling short of the first major resistance level at $52,993, Bitcoin fell to a late morning intraday low $48,852.0.

While steering clear of the first major support level at $48,422, Bitcoin fell back through the 23.6% FIB of $50,473.

Finding late morning support, however, Bitcoin broke back through the 23.6% FIB to revisit $51,000 levels before easing back.

A bearish end to the day saw Bitcoin fall back through the 23.6% FIB to end the day at sub-$50,200 levels.

The near-term bullish trend remained intact in spite of the latest reversal. For the bears, Bitcoin would need to slide through the 62% FIB of $27,237 to form a near-term bearish trend.

The Rest of the Pack

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

Crypto.com Coin rose by 2.70% to buck the trend on the day.

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

Chainlink and Ripple’s XRP slid by 11.06% and by 10.17% respectively to lead the way down.

Binance Coin (-5.68%), Bitcoin Cash SV (-5.21%), Cardano’s ADA (-4.66%), Ethereum (-6.47%),  Litecoin (-6.77%), and Polkadot (-8.32%) also struggled.

In the current week, the crypto total market rose to a Monday high $2,100bn before sliding to a Friday low $1,648bn. At the time of writing, the total market cap stood at $1,787.

Bitcoin’s dominance rose to a Tuesday high 54.32% before falling to a Thursday low 50.03%. At the time of writing, Bitcoin’s dominance stood at 52.25%.

This Morning

At the time of writing, Bitcoin was up by 0.15% to $50,238.0. A mixed start to the day saw Bitcoin fall to an early morning low $5,0005.0 before rising to a high $50,273.0.

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

Elsewhere, it was a mixed start to the day.

Polkadot was up by 0.25% at the turn of the day to buck the trend.

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

At the time of writing, Crypto.com Coin was down by 3.22% to lead the way down.

BTCUSD 250421 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid the $50,071 pivot to bring the 23.6% FIB of $50,473 and the first major resistance level at $51,291 into play.

Support from the broader market would be needed for Bitcoin to break out from Saturday’s high $51,201.0.

Barring an extended crypto rally, the first major resistance level and Saturday’s high would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at $53,000 before any pullback. The second major resistance level sits at $52,420.

Failure to avoid a fall through the $50,071 pivot would bring the first major support level at $48,942 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of sub-$47,000 levels. The second major support level at $47,722 should limit the downside.