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End of the Month: Should Bounce Back be Expected After a Dramatic Drop in the BTC Rate?

Sep 30, 2019

The first fall month is ending at a rather deep rate correction for all cryptocurrencies with capitalization of over $1B. At the end of last week, the Fear & Greed Index dropped to 12 points, but even today we are observing moderate growth of this indicator, which signals that things are starting to calm down. 

BTC/USDT. Back early last week, we noted the dramatic crash of BTC/USDT to the $7,800 mark, which was located within the strong technical support level of $7,000-$8,000. We analyzed the situation and arrived at the conclusion that the continued rate decline was unlikely. The buyers’ activity remained weak, and the BTC/USDT rate not only breached but held at the MA200 at D1, which indicated the change in mid-term expectations from bullish to bearish. Nevertheless, the continued downwards movement failed to materialize. It will only be possible to determine the future price vector after the rates break out of the fairly wide flat of $7,500-$8,500. 

BNB/USDT. Let’s now take a look at the BNB/USDT pair, which continues to correlate with BTC. BNB rates are holding in the $14.00-$16.00 flat we noted before, but the activity of both buyers and sellers remains very sluggish. All this points towards the uncertainty in the marketplace, which may be due to the yet another emergence of BTC futures. 

Bakkt launch and the vain hope for BTC blastoff. Many of you likely remember what happened when bitcoin futures premiered in December 2017. Back then, CME, the world’s largest futures exchange, debuted bitcoin futures contracts and became the first regulated trading platform to offer cryptocurrency derivative instruments. Many market players hoped, to no avail, that as a result of attracting institutional investors and major hedge funds to the derivatives market bitcoin will go to the moon. But their hopes failed to translate into reality. Now we are yet again observing a similar situation: the launch of the regulated platform Bakkt for trading digital assets did not result in the expected growth of BTC and the market overall. However, these two situations, although similar, are not identical as Bakkt futures are physically-settled derivatives (settled in BTC). Furthermore, over the past two years the cryptocurrency market has undergone some serious changes. Consequently, there remains a high risk of the renewed growth trend for BTC and other coins. 

Ethereum: forecast for the immediate future. After Ethereum’s spectacular collapse to the technical level of support of $150, the rate is hovering around the usual mark of $167, which has been keeping ETH from an even stronger decline for quite a while. But we’ll be able to talk about the buyers’ readiness to renew the growth trend only after the price bounces back to above $177. Good news for the buyers is the fact that the demand at around $150-$160 remains high, keeping the price from sliding further downhill. This can be seen from the long lower shadows at D1 and H4. Taking all of these factors into account, the bulls will be closely monitoring the narrow level of resistance of $170-$175, which, once it’s broken, will enable them to return to the $200 mark and continue on to the September highs. At the same time, the nearest strong technical levels of support are at $150 and $140, which, if they are reached, can be viewed as a more advantageous buying price.

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