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Bitcoin $3000 Within Reach

In just one week’s time, Bitcoin went from an extreme low of $1800 to a high of $2900 as fears of a hardfork began to dissipate.  I posted a video as the market had bottomed and I called for a change in tone as I had expected the downtrend to be ending.  I also pointed out several altcoins I was picking up.

At that time, Bitcoin was $2200 and several of the altcoins were showing good bottoming formations.  Among the few I mentioned were Stratis, Anshares/NEO and NEM.  Since that video, we have seen explosive moves in those coins.  For example, Stratis has already posted gains of over 60%!

 

The market has since taken a pause and many of those moves are being consolidated with the price of Bitcoin tightening up around $2700 and Ethereum at $220.  It would not be unusual to see some pullbacks here but there is no doubt the market sentiment has changed and we are now in bull-mode.  I’m watching for a breakout on BTC around $2900 and ETH around $240.

Ethereum still has a long way to go before it gets back to all-time high prices but Bitcoin is only a few percent away.  A break out above $3000 will lead to a run up in prices that could see Bitcoin move very quickly.  This would also have a positive effect on the current leading altcoins which could see prices move higher.

Apart from Bitcoin & Ethereum, I continue to like the price in action in Stratis, NEM, Litcoin, Dash, Siacoin & Antshares/NEO.  There are also several smaller-cap names which are showing strength off the lows here.  Among those are PIVX, Ubiq, Storj, GameCredits & Iconomi to name a few.

Below is the latest video following what I dubbed “The Greatest Day in Bitcoin, Ever!”.

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Was That the Bottom?

The cryptocurrency markets have seen extreme selling in the past few days following the larger downtrend we’ve been in since June.  Total market cap has come down from $115 Billion to $80 Billion.  I’ve covered the selling several times in recent videos (linked below) and there is no doubt that the trend is still down.  However, one has to ask: “Was the recent selling capitulation or will we see another leg down?”

My experience in the markets is that tops don’t form in a day and neither do bottoms.   Perhaps the recent selling was the low-point for now and we bounce around for a while before going up again.  Perhaps we see another sharp leg down.  Either way, the biggest clues will come from Bitcoin so let’s look at that chart to see if we’ve hit a bottom.

Above is the daily chart of BTC with Fibonacci levels being measured from $1200 up to the top at $3000.  It’s clear a descending triangle is forming following the big drop in early June.  This is a bearish formation that leads to a sharp leg down if the support zone is broken.  Right now, that support zone is between $2250 and $2400.  Bitcoin is currently right in the middle of that zone which also happens to coincide with the 38% retracement level.  So far, support is holding and the RSI is still around 40, both positive signs for now.

The shorter term moving averages are now turning bearish as well.  If the current support levels break, the next stop is $2100.  If that level breaks then the next level of support is the zone between $1800 – $1900.  If we get that far down, that is where I believe Bitcoin will form a solid bottom and would be a tremendous buying opportunity.

I would wait to see the $2500 level recaptured and ultimately the $2600 level before feeling confident about a new rally and making larger capital commitments.

Below is the daily chart of Ethereum with Fibonacci levels being measured from $53 up to the top at $400.

The drop in Ethereum has been steep and quick.  The selling in ETH has also triggered deep corrections in most of the other altcoins.  While the downtrend is still in tact, we are currently as key Fibonacci ratio that historically acts as major support.  Volume has been very high today so this may be a low point for now.

If this level does not hold, then we could see prices drop to the $140-$160 range as that coincides with the last base as well as the next Fib level.  We are currently deeply oversold so a rally up to the $240 area could be next.  I would like to see the downtrend broken and the $260 and ultimately the $300 marks recaptured.  If you like ETH long-term, this may be a great place to look at it.

Should You Sell Here?

If it were me, I would wait at this point and assess how strong the bounce is.  We could rally strong from here but I would keep a close watch on these support levels because if they break, then we could see another sharp leg down.

Should You Buy Here?

I am personally not making an new buys right now.  I may look for some short-term trades if the rally begins but will likely take profits as we approach resistance and reassess the markets from there.

There are several altcoins that are key support levels and have already seen deep corrections.  Many of these could offer great buying opportunities here for longer term value plays but I would not expect huge gains right away.  Some of those right now are Siacoin, Stratis, Golem, Anshares/NEO, Waves and NEM.  I would also be looking at Litecoin and Ethereum.

With all of these however, one should keep a very tight stop loss in place (physical or mental) and be ready to step aside and if heavy selling ensues.

My Approach Right Now

I don’t like to post my portfolio allocations because I can change them often and sometime drastically based on market conditions.  So full disclaimer, by the time you read this, it may be different.

First off, I’m am in a 50% cash position and have increased my fiat from 25% just a few days ago.  I continue to take a conservative approach right now and remain cautious with any new buys.  As of this writing, my largest holding is Litecoin and it has served me well during this recent selling.  I still have a little Bitcoin but have sold a lot of it and will wait before getting back in.  I have essentially no Ethereum right now.  I do have several small positions in a handful of altcoins that add up to about 10%.  I recently (past days/weeks) exited many positions as support levels and stop losses were taken out.

For now I’m on the hunt for set ups and bottom formations and will step back in when it looks like a good low has been established.  No doubt there will be some trade-able rallies between now and then but as for longer term holds, I want the trend in my favor first.

Conclusion

I think we’ll bounce from here but will ultimately see more downside testing before this correction is over. The bottom in ETH may be in but I would not be surprised to see BTC go lower.  It’s best to be patient and wait it out instead of guessing bottoms along the way.  There will be a bottom! When it shows up, we’ll know and we’ll have many opportunities.  The trend will be in our favor and cryptos will be making daily/weekly gains again.  They are not going anywhere and blockchain is here to stay!

Recent Videos on the Topic

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Did Ethereum just confirm a longer term down trend?

The last several weeks have seen extreme volatility and the recent selling in Ethereum is signalling caution ahead!

It’s important to watch Bitcoin and Ethereum very closely as they are the leaders that have lead this rally higher so any selling in those two will be amplified by the other altcoins.

The first crack appeared on June 15th when Ethereum dropped from $390 to a low of $260 during a rapid and steep sell-off before recovering.  It bounced all the way up to $370 before making a lower top and then began to sell-off again but was supported by the moving averages.

Then we had a market freeze on June 20th due to the Ethereum blockchain being clogged with ICO activity which led most exchanges to pause activity on ETH temporarily.  When the markets opened up again on Wednesday, we saw heaving selling in Ethereum which also spilled over to the others.  We saw ETH trade down to $290 before bouncing again to $325.

Then, yesterday we saw Ethereum begin selling off again on rumors that founder Vitalik Buterin had died.  The selling was largely contained to ETH and the others held up well.  However, the momentum was too strong and all of the other altcoins have seen big moves down today.

Let’s look at some charts to see where things could be headed in the near term and intermediate term.

The concern with the recent action in Ethereum is that is has been making a series of lower lows.  It had only been a warning until today and not much to worry about since the recent lows in mid-June had not been breached.

That all changed today and we saw a swift drop that not only undercut all moving averages and recent support, but also went below the extreme low in mid-June around $250.  As you can see in the daily chart, we saw ETH drop to the low $200’s before bouncing today.

It’s important to note that today’s low corresponded with the longer-term 50-day SMA as well as some support from late May. The only silver-lining in today’s action.

Near-term, we are very oversold so I expect a bounce from here.  We could go as high as $280-$300 before seeing resistance again.  The strength of the bounce will say a lot about what to expect from Ethereum over the next few months but ultimately, I see another leg down and more downside testing before the correction in ETH is over.  This is just my opinion.

The chart above is a closer look showing the 4-hour bars.  As you can see, ETH has been bouncing off the very short-term 10 period EMA and is now very extended to the downside.  I believe a bounce is imminent but the test will be if ETH can recapture the $300 mark soon.

We may have seen the final low today and perhaps ETH just bounces around here for a few months.  That would be best case and would create a nice base for another run up later.  However, the charts suffered heaving damage in recent weeks and a very big top is forming.  I see more downside testing and sellers to show up before this correction is complete.

If today’s lows do not hold, then the next level of support is around $140!  I do not expect to see it drop that far but anything could happen and we could see a very brief flash crash again.

In the chart below, the Fibonacci retracement following the breakout at $95 show that we hit the key ratio today at 61.8%.  That is another positive sign for the near-term.  Below that, the next level would be around $160.

Should you sell?

Well a lot depends on where you got in.  If you’re sitting on a profit and didn’t sell before the break below $300, I would hold and learn more from the coming bounce.

I’ll be posting a video soon looking at ETH as well as Bitcoin and others.  Overall, I am of the opinion that at best, the market will pause here and consolidate the move from the past four months.  At worst, we will fall further and see more selling in Bitcoin, Ethereum and others over the coming months.

As you all know, longer term, I’m very bullish on Cryptocurrencies and Blockchain related assets.  I fully believe the uptrend will resume and new leaders will emerge.  There will continue to be opportunities in the crypto space we’ll go well beyond $100 Billion market cap.  For now, you must be very selective on which one’s you buy into now.  Caution is advised on any new purchases.

Stay tuned for more updates.