Welcome to the last 2018 update, post Christmas and pre New Year! Was Santa good to you? While cryptocurrencies are down across the board over the past 36 hours, it is only normal to take a breather after the powerful rally we have witnessed. Now some may view the most recent bounce as a “suckers rally” or a “dead cat bounce”, which means it is only a temporary advance within a larger move to the downside. While we would need more price action to get the real answer, for now it appears a healthy retreat inside a larger move to the upside as support levels are holding.
The reason I remain bullish now is two-fold. Fundamentals are increasing which supports higher prices in certain cryptocurrencies. The other reason is that the composition of the cryptocurrency market is changing. In 2017 you had roughly 20% institutional money, largely from technology focused venture capital firms, and 80% retail traders who were chasing big profits. This created the bubble which we witnessed deflate. Throughout 2018 this has changed to 80% institutional money and 20% retail traders. A lot of weak coins will slowly disappear and it will create a more robust market overall. This will also support higher prices.
One of the biggest drivers of higher prices in 2019 will be the continued increase in usage of cryptocurrencies to either pay bills, purchase items or send money. One of the reasons is the low cost alternative of using cryptocurrencies and while Asia is leading this push, migrant workers in the US are quick to jump on board. World Bank Data showed that in 2017, $148 billion was send from the US all over the world. The majority of this is from migrant workers who send money back home. Blockchain research firm Clovr compiled a new report and found that the latest figures show 15.8% use cryptocurrencies to send money to loved ones.
This figure is likely to accelerate to the upside in 2019 and Clovr noted that “If some of the largest companies in the world, like Microsoft and Starbucks, are comfortable accepting cryptocurrencies as a form of payment, this should instil confidence in using these new forms of payment for sending remittances.” Even the IMF is a bit more open towards the sector and managing director Christine Lagarde stated that “There are new and evolving requirements for money, as well as essential public policy objectives. While the case for digital currency is not universal, we should investigate it further, seriously, carefully, and creatively.”
Last week I mentioned the breakout in Bitcoin which you can follow up on at “Bitcoin - Forex Combo Strategy: Bitcoin Breakout”. I think we are now in the early process to exit the 2018 bear market just as other asset classes are entering one. This is very likely to be accompanied by a spike in volatility as support and resistance levels will be tested. I do expect a series of higher highs and lower lows, but one final test of the most recent intra-day low of $3,089.47 cannot be ruled out. With only a few trading sessions left in 2018, overall cryptocurrencies are on track to deliver a powerful close for the trading year with a bright 2019 ahead of them.
Now let’s see what happened to my portfolio over the past week. As I pointed out during last week’s update, I expect Bitcoin to push back above $6,000 in the first-quarter of 2018 and for Ethereum to test the $200 level. Around those levels I am very likely to sell my 100 Bitcoins which carry an average entry price of $5,130. I am also planing to exit my 1,500 Ethers once the price approaches $200 and re-allocated my long-term assets. The average entry price for my 1,500 Ethers is $171.67. The images below show my current positions.
Gold continued to advance as risks have increased, driven by events in the US. As traders seek safe havens, this precious metal is likely to extend its march to the upside. A breakout above $1,300 appears to be a few trading sessions away which bodes well for my 100 lots in Gold which I purchased at $1,195.00. Each pip, or cent in this case, is worth $100 and the margin requirement is $123,179. The image below shows the rally as well as my position.
Last week I had five open forex positions and three were closed for a profit, one for a loss and one remains open. On December 21st 2018 the adjusted stop loss was triggered in my 30 lots USDCHF short position at 0.9865 which resulted in a profit of 75 pips or $22,676. On the same day, my 50 lots long position in the EURUSD was closed as my adjusted stop loss was triggered at 1.1450. This resulted in a profit of 180 pips or $90,000. On December 24th 2018 my stop loss order was triggered in my 30 lots NZDUSD short position at 0.6720 for a profit of 150 pips or $45,000. The three images below show the entry and exit levels and times of my profitable trades.
On December 21st 2018 my 30 lots long position in the GBPJPY was closed at 140.750 for a loss of 150 pips or $40,050. My 30 lots short position in the EURGBP which I took at 0.9000 on December 17th 2018 remains open. The margin requirement is $6,813 with a pip value of $380.13. The images below show my closed GBPJPY position for a loss and my open EURGBP position.
I added a 50 lots long position in the GBPAUD on December 20th 2018 at 1.7750 according to the trading recommendation which can be found at “GBPAUD Fundamental Analysis – December 20th 2018”. The margin requirement was $12,610 and each pip was worth $352.91, but my adjusted stop loss was triggered earlier today and I closed this position at 1.8000 for a profit of 250 pips or $88,288. The image below shows my trade.
The USDCAD long position which I added on December 21st 2018 originally called for a short position, but if a breakout occurred above 1.3550 a long position was recommended. You can read the trade set-up at “USDCAD Fundamental Analysis – December 21st 2018”. I bought 25 lots at 1.3570 for a total margin requirement of $5,000 and a pip value of $183.84. I took only have my current lot size as this was the secondary recommendation. The image below shows my entry.
On December 24th 2018 I sold 50 lots in the USDCHF at 0.9930 for a margin requirement of $10,000 with a pip value of $504.88. The original trading recommendation can be found at “USDCHF Fundamental Analysis – December 24th 2018”. Earlier today my adjusted stop loss was triggered at 0.9880 for a profit of 50 pips or $25,244. You can see this quick trade in the image below.
Now let’s wrap it up with my overall portfolio update. I have 100 Bitcoins worth $368,100 while my 1,500 Ethers are worth $180,675. My 100 lots in Gold soared to a total value of $952,179. I have two open forex positions, one EURGBP short position which is worth $11,375 and one USDCAD long position worth $10,515. I also closed six forex trades, five for a profit and one for a loss which boosted my forex cash balance to $346,411. My total portfolio soared to a new all-time high of $1,869,255, up $480,107 from last week. Open your PaxForex Trading Account now and use my Bitcoin - Forex Combo Strategy to boost your value in 2019!