Cryptocurrency: "Risk-On" Returns to the Market

Analyst Mikhail Mashchenko speaks about the current situation in the cryptocurrency market and the seasonality of rates.

Community members have noticed positive changes in the market. In the last two weeks, Bitcoin grew by 40%, Ether by 70%, Ripple by 85%. Thus, the theory of the sale of cryptocurrencies by American traders for paying their taxes is quite justified. Let me remind you that at the beginning of the year, crypto traders suddenly realized that they owe the tax service about $25 billion and they began selling their assets because of the lack of necessary amounts for deductions to the budget.

The news background is also changing for the better. According to Bloomberg, the mood on the market has become much more “bullish.” For the first time since March 2017, the number of buyers on the market was 90%, and only 10% were sellers. At the recent Sohn Investment Conference, where financial sharks share investment ideas and discuss the most promising tools, managing director John Pfeiffer decided to tell about Bitcoin, which was predicted to grow to $75,000 by the end of 2018. In his opinion, Bitcoin can quite easily replace gold in “our aspiring decentralization and struggle with world censorship,” since it is much easier to store and transport “digital gold.”

Of course, there was a lot of negativity. For example, the head of the San Francisco Federal Reserve Bank criticized Bitcoin, in particular, talking about the existence of a large number of problems with the cryptocurrencies, such as fraud, money laundering, and financing of terrorism. The final verdict was the view that Bitcoin is not a currency, but something that has some value and does not have a future.

As for the futures for cryptocurrencies, there is a “bullish” divergence. The value of securities falls as the number of short positions decreases, which can become the foundation for a rapid turnaround of rates.

The current situation makes us remember the seasonality of prices. If you study the history of trade and put annual charts on top of each other, you can see that at the beginning of the year, there is a decline, but from June to July, rates begin to grow. It is difficult to say whether this dynamic will repeat in 2018 and whether we will witness a new price record, but this factor complements the general optimistic picture and gives hints at a good prospect.

The serious resistance levels are $9,800, $10,000, and $11,300. Before further growth, a rollback to support of $8,800 and $8,000 is possible.

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