If April showed the light at the end of the tunnel for the prolonged downturn in Cryptocurrencies, May has propelled the digital currencies to new highs with the vertical ascend in Bitcoin that we are seeing currently. While the Alt. coins have recorded double-digit percentage gains, none comes close to the astronomical rise we see in the Crypto kingpin BTC, which has taken out $6K, $7K & $8K within the last one week. BTC is now trading around the $8,000 mark after peaking around $8300 earlier today. The last time we saw these price levels was back in July 2018. There has been no significant correction in the price of Bitcoin ever since it took out the MT resistance @ $5850 – No wonder the BTC dominance is touching the 60% mark, another 10-month high. Looking at the BTC daily chart, it has gained significant momentum after taking out the resistance level. To visualize this turnaround – BTC has increased in price ~ 164% from the yearly low while gaining ~ 101% from the current rebound that started just over a month ago. Both the Short term (ST) & Medium term (MT) bias has shifted to the bullish side as long as the support zone holds. Next target on the upside would be $8500.
As we have seen in the previous bull runs, BTC dominance tends to fall as people move towards riskier digital assets. Considering that, Alt. coins either have a lot of catching up to do or we might be looking at a significant correction in BTC. I already wrote last month about what precipitated the Crypto rebound that started on April 2nd. There might have been a few more catalysts to catapult BTC to record highs within the past week. Let’s review some of those headlines.
- Institutional interest – One thing that’s for sure is the increased institutional investment in digital assets that has been materializing for the past many months with innovative trading products being offered at enticing price levels. Fidelity Investments – one of the largest Asset fund managers in the world ($2.5 trillion) has shown its willingness to add Cryptocurrencies as an investment for its institutional investors. This decision came on the back of the research conducted by the firm of 441 institutional investors – including pensions, hedge funds, financial advisors, and endowments. The results also showed that 22% of the respondents had already bought Cryptos for their portfolios.
- Physical Futures Trading – Futures exchange Bakkt finally announced the soft launch of the its physically settled bitcoin futures contracts in July 2019. The much-awaited trading product is expected to get an approval from CFTC (US Commodity Futures Trading Commission) soon. Earlier, the platform had acquired a cryptocurrency custodial service with plans to register Bakkt as a licensed trust in the state of New York. Being licensed & registered Bitcoin custody platform would land it a lot of credibility & peace of mind for the investors. In related news Intercontinental Exchange Inc (ICE) took advantage of the ‘Crypto winter’ to accumulate digital assets at extremely discounted prices for the clients of its Bakkt platform.
- Big Tech Usecase – Another important news that hit the wires yesterday was of tech giant Microsoft building a decentralized identity (DID) network on top of Bitcoin blockchain. The open source digital identity standard would give users the control of their data. This is an important development considering the fact that an existing big tech company has been able to find a use case for the bitcoin blockchain.
- Coinbase Listing & German ETN – While this piece of news was not concerning the Bitcoin directly nonetheless it lifted the fortunes of Ripple – third largest crypto by market cap. Coinbase, one of the largest crypto exchanges confirmed the addition for XRP trading for its New York users. This was accompanied by news from Europe where German exchange Boerse Stuttgart announced the launch of XRP & LTC based ETN (Exchange Traded Note). The immediate reaction was a jump of 22% in the price of Ripple.
With the current bullish momentum in the Cryptos, CME saw an all-time record of 33,700 contracts on Monday equivalent 168,000 BTC ($1.35 billion) — almost 50% rise versus the previous high of 22,500 contracts and 112,700 BTC (currently $909.2 million) on April 4. Coming back to charts, let’s take a look at some of the other top digital coins.
ETHUSD (MT-Bullish, ST-Bullish) Yearly low ~ 165% gain Current rebound ~ 54% gain, With the ceiling break of the bullish channel it seems headed for $260 where it can face headwinds. Overall sentiment has turned positive with this move.
XRPUSD (MT-Neutral, ST-Bullish) Yearly low ~ 54% gain, Current rebound ~ 38% gain, Ripple is late to the party with the most recent spike after Coinbase listing eyeing to break the $0.45 level for a convincing move upwards to $0.55 next.
BCHUSD (MT-Bearish, ST-Bullish) Yearly low ~ 449% gain, Current rebound ~ 143% gain, Bitcoin Cash still needs to clear that MT resistance hurdle @ $415 to confirm a bullish bias reversal, would be eyeing $650 next.
LTCUSD (MT-Bearish, ST-Bullish) Yearly low ~ 330% gain, Current rebound ~ 65% gain, Litecoin is trending close to its resistance trying to break out of the bearish zone, a break above $110 would confirm the bias flip – a favorable scenario as long as the bullish trend line is honored.
Some interesting observations from the comparison of the price movement in the Top 5 cryptos emerge. The underlying theme is the sustained recovery from the yearly lows of December 2018 with the current rebound which emerged on April 2nd & continues to date. The cleanest reaction so far has been from Bitcoin, which recorded three-digit gains both from the yearly lows & the current rebound. Ethereum matched the gains of Bitcoin from the yearly lows but only managed to post half the gains from the current rebound. The most anemic gains have come from Ripple which only posted modest two-digit gains for both the periods – Ripple actually made a lower low after the April rebound before spiking today. Bitcoin Cash actually beat its predecessor comfortably by posting massive gains for both periods as noted above, however losses from the hard fork need leave more ground to be covered. And finally Litecoin matched BCH’s gains from the yearly lows but posted modest gains from the latest period.
All these observations are indicative of the fact that there is a general theme of bullish price movements, however, individual coins have their own dynamics as well. For now, people who were brave enough to buy cryptocurrencies at the discounted prices earlier this year are looking at this & smiling…