Technical analysis of this week’s crypto trading market

It was a gloomy start of the broader cryptocurrency markets as the prices of bitcoin dropped to below 6,800 levels on early Asia Monday, which came after four consecutive weekly losses and sent BTC back to the mid-May levels. Meanwhile, we’ve seen red across the board in the altcoin space, with ETH and XRP down more than 7%, NEO slumped 11%.

The bearish sentiment is expected to remain intact as OKEx’s data shows that futures traders have shown less optimistic about where bitcoin prices will finish by the year-end. However, other data suggest that near-term selling pressure has been somewhat eased. While the risk-off appetite persists in the crypto space, the Fear & Greed Index has reached 17, the lowest since late September, indicating that investors could be overly worried about the market.

Looking ahead, OKEx Technicals expects the market will show signs of stability after a series of selloffs as the selling pressure absorbed. Although the short term outlook could still be bumpy, the recent corrections could create buying opportunities for long-term HODLers.

What You Missed

  • Bitcoin’s hash rate has back to recent lows after a short-term rebound. Fresh data shows that the BTC hash rate has dropped to below 85,000,000 tera hashes per second, that’s the lowest in more than 2 weeks. At the same time, the network difficulty has slightly increased over the weekend. We’ve explained that the high network difficulty could increase miner’s selling pressure, which could be part of the reasons behind the recent BTC selloff. Crypto Analyst Charles Edwards believes that the possible miner capitulation could create new opportunities.
  • Institutional asset managers have been shorting BTC, that’s according to the newly released Commitment of Traders from the CME. Data shows that as of last Tuesday, asset managers have been doubled their BTC short positions, while leveraged names have slightly increased their longs.
  • South Korea is set to boost its blockchain investment. ZDNet Korea reports that the country’s ministry of science and technology has planned to invest USD 382 million in over 6 years, to leverage the emerging technology to help its economic growth.
  • The US SEC should review its hard stance on creating bitcoin ETF, that’s according to Wall Street veteran Dave Weisberger. The former Citigroup MD and the architect of its global market making system said, “the SEC shows its bias by holding bitcoin to a higher standard given that bitcoin is neither more subject to potential manipulation nor operates in a market that is harder to monitor.”
  • JP Morgan is reportedly considering creating a blockchain-based automobile inventory system aim to increase the efficiency of the commercial lending process. The project came out of the company’s patent-pending distributed ledger-based floorplanning methods.

Price Analysis

BTCUSDT

  • BTCUSDT has given up all its gains from the October rally and fell back to the downward channel which established since late June (red line), a death cross has formed earlier last week.
  • An imminent rebound should not be ruled out. The RSI, ultimate oscillator, and stochastic oscillator all flashed oversold signals, as the pair have approached the lower end of the channel (blue lines). The pair also went into similar situations back in late September and late October (blue boxes), and the price has rebounded when all three indicators have hit the oversold levels.
  • On top of the oversold signals, OKEx BTC Long/Short Ratio (figure 3) shows that most of the short positions have been closed, an environment that usually able to stir positive bias.
  • However, OKEx’s quarterly futures have been trading in discount, indicating that certain pessimistic sentiment remains among futures traders.
  • Despite the recent bearish sentiment, bitcoin is remaining in a bull run over a longer-term perspective. Figure 4 is a good example to remind HOLDers to focus on the bigger picture.
  • Key levels: 6276, 7112.
Figure 1: BTCUSDT Daily Chart (Source: OKEx; Tradingview)
Figure 2: OKEx BTC Quarterly Futures Basis (Source: OKEx)
Figure 3: OKEx BTC Long/Short Ratio (Source: OKEx)
Figure 4: BTC Performance Since 2H15 in Log Scale (Source: Tradingview)

ETHBTC

  • While major altcoins have been suffering some double-digit losses, some crypto-to-crypto pairs could present alternative opportunities, and ETHBTC could be one of them. The pair has been moving in an upward channel since September, and it has been approaching the lower end of the channel.
  • The ultimate oscillator also produced some higher lows, in-line with the price actions. If the weakness in BTC further extends, this pair will be interesting to watch.
Figure 5: ETHBTC Daily Chart (Source: OKEx; Tradingview)

LTCBTC

  • LTCBTC could be another crypto-to-crypto pair to watch during this round of BTC selloff, as LTC generally suffered less than BTC.
  • The pair has reached its lower end of the Bollinger Bands, indicating a short-term rebound could be in sight, however investors should not expect a trend reversal at this point as the pair largely remained in a downtrend.
  • From a medium-term perspective, the pair has been traded within a range (green lines) since September, any significate rebound from this point could give another opportunity to short the pair.
Figure 6: LTCBTC Daily Chart (Source: OKEx; Tradingview)

XRPUSDT

  • XRPUSDT has reached a record intraday low of 0.199 in the early Asia Monday session, plummeted over 10% at the time of writing.
  • Again, the November selloff has put the pair in the oversold area, and a short-term rebound should not be ruled out.
  • It’s key to see if the pair can produce a daily close above 0.2024, which is the low back in late September.
Figure 7: XRPUSDT Daily Chart (Source: OKEx; Tradingview)

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.


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