A key support level for the controversial cryptocurrency Bitcoin was able to prevent total collapse for the time being as it attracted enough bids which allowed a short-covering rally to unfold. Price action briefly moved into a horizontal support area between $5,540.00 and $5,925.05 when Bitcoin’s latest rout recorded an intra-day low of $5,749.93 and then another dip with an intra-day low of $5,840.70. A breakdown below $5,540.00 could spark a a new round of selling which is unlikely to be contained until it will dip to $1,802.00where next support awaits.
It is important to point out that a study earlier this year indicated that with the exception of the four biggest Bitcoin mining farms, other miners are losing money with Bitcoin below $6,800. Despite the current reversal, Bitcoin still has a way to advance in order for miners to become profitable again. The biggest question now is if this short-covering rally can last or if it is a dead-cat bounce. Bitcoin’s sell-off dragged most other cryptocurrencies down with it. At the peak of cryptocurrency mania, the market capitalization of the sector stood around $835 billion. The current sell-off took this figure down to $190 billion.
Setbacks for a cryptocurrency fund in the US by the SEC acted as a final tipping point to push cryptocurrencies to the downside. 2018 saw government regulators shut down exchanges, make mining and trading cryptocurrencies illegal, thefts at exchanges and an overall more hostile environment. Adding to the list of issues is disagreements between key backers which resulted in a series of hard forks. Bitcoin is losing support as key figures prefer Bitcoin Cash. In general, cryptocurrencies have been overvalued for an extended period of time and many of the few professional outlets involved have warned of a sharp correction.
Black Square Capital portfolio manager Chris Yoo stated that 'The crypto market appears to be in its final stretch of its bearish state. This correction is not unexpected due to the over-valued nature of many blockchain projects and regulatory uncertainty.' Take advantage of the price drop in Bitcoin as well as Ethereum and make a deposit into your PaxForex Trading Account which will allow you diversify your portfolio through the forex market.
Hopes that more portfolio managers would allocate funds into Bitcoin and other cryptocurrencies due to the lack of correlation to other markets has not materialized as many stated that their clients have zero interest in the sector. Bitwise Asset Management VP of R&D, Matt Hougan, noted that 'Non-correlation is not the same as inverse correlation so there’s no guarantee that when the market goes down crypto will go up.' Maybe the biggest hurdle remains that until today cryptocurrencies have shown little practical use as a currency. The Bitcoin extinction threat is avoided for now and here are three forex trades to diversify your Bitcoin and Ethereum assets with.
Forex Profit Set-Up #1; Buy EURHKD - D1 Time-Frame
The Euro was exposed to the fallout of the sharp drop in the Turkish Lira, but with the Turkish currency reversing the Euro is set to join the short-covering rally. The EURHKD plunged and is currently in the process of stabilizing inside of its horizontal support area. As bullish momentum is recovering, this currency pair could push above the upper band and advance into its descending resistance level from where a further breakout is anticipated. Forex traders are recommended to place buy orders inside its horizontal support area.
The CCI descended into extreme oversold conditions, but recovered from its lows and is now on the verge of moving above the -100 mark. This could trigger a short-covering rally and push the EURHKD further to the upside. Open your PaxForex Trading Account today and access the profitable world of forex trading. Join our growing community of successful forex traders and start changing your life today!
Forex Profit Set-Up #2; Buy GBPDKK - D1 Time-Frame
Denmark will continue to stick to negative interest rates while the UK has started to raise interest rates. With Brexit around the corner, there is unlikely to be another increase until the summer of 2019. The British Pound is positioned to advance as the economy is in better shape than many economists expect. The GBPDKK just completed a breakout above its horizontal support area and bullish sentiment is set to carry this currency pair further to the upside. Forex traders are advised to sell the dips in the GBPDKK down to the upper band of its horizontal support area.
The CCI spiked from extreme oversold territory together with the advance in price action. This technical indicator briefly crossed above the 0 mark, before retreating. A sustained push above 0 would complete a momentum change to bullish. Subscribe to the PaxForex Daily Fundamental Analysis and let our expert analysts guide you through the forex market which will yield you over 500 pips per month by simply copying our recommended trades.
Forex Profit Set-Up #3; Sell USDPLN - D1 Time-Frame
The US Dollar is ripe for a correction, following an advance which stunned many analysts. Bullish pressures in the USDPLN are collapsing as this currency pair is on the verge of a breakdown below its horizontal resistance area. Profit taking is set to take price action down to its ascending support level from where another breakdown is anticipated as bearish pressures are accumulating. Forex traders should place their sell orders inside its horizontal resistance area in order to take advantage of the attractive downside in the USDPLN.
The CCI remains in extreme overbought conditions, but has receded from its highs. With the spike in bearish momentum, a breakdown below 100 could trigger profit taking in this currency pair. Follow the PaxForex Daily Forex Technical Analysis and never miss out on a profitable trading opportunity; receive our technical trading set-ups delivered directly into your inbox and copy our recommendations into your own trading account.