The much awaited correction in the price of the largest cryptocurrency, bitcoin came and went this week, and the pullback is apparently already over. BTC/USD is back above the $17,000 mark right now, and – according to technical- as well as fundamental analysis – it is set to begin testing new highs soon. Some say it will conquer the $20k peak this year, and by the way it’s currently moving, that is indeed possible, both in technical and fundamental terms.
The Technical Aspect
Most proper bitcoiners harbor a deep disdain towards this price analysis-angle, dismissing chart patterns and technical indicators as old-fashioned hocus-pocus that simply holds no water in this dynamic and volatile vertical. In some ways, these detractors are indeed right. Dojis predicting bullish reversals and Stochastic oscillators screaming “overbought” don’t seem to paint an accurate picture of the price-evolution of this deflationary digital gold, which bitcoin has turned into over the last year or so. Still, braving the possibility of snarky comments piling up under this piece (not entirely baselessly either), we’ll take a quick glimpse at what the technical artifices tell us about BTC right now.
Closing out Sunday with a Doji candle, the BTC/USD pair registered a bullish reversal on Monday, a reversal further validated by the 10-day MA (moving average). The coming rally looks especially well-backed by increasing trading volumes and the fundamentals which pin the breakout target squarely to the $20,000 mark.
The RSI shows overbought conditions for the asset, though at this point, it is safe to say that most analysts will simply ignore that. The stochastic oscillator and the RSI are probably the best examples of why the “traditional” set of technical analysis tools is so inadequate for the attempted prediction of crypto asset price evolution.
Despite the alarm sounded by the RSI, the fundamentals do seem to be in place for the coming dash to $20,000. Having raised excitement as well as concern, its first trading day behind it, the CBOE says that everything is going according to plan. On Monday, the price of BTC registered a new all-time high, shortly after derivatives trading began at CBOE. The spike – retraced and almost revisited since – was probably elicited by the allaying of some of the fears brought about by the CBOE/CME “casino” angle. Last week, we discussed some of these fears and indeed – while they are still definitely there – the first day of CBOE trading allowed people to largely ignore them.
The Derivatives Game is ON!
According to the CBOE’s Michael Mollet, the day’s trading saw a couple of halts, but they were due to the futures price movements and not to system failures. Since the beginning of the December 12 session, some 197 contracts were traded, with the January contract price set to ~$18,000.
While CBOE’s bitcoin futures launch has thus far gone hiccup-free, next week we’re in for another watershed moment, when CME’s bitcoin futures go live, on December 18. Further down the line, Cantor Fitzgerald are preparing to bring bitcoin-based binary options into the mix – make of that what you will…
Litecoin Riding the Crypto Rally Too
From a start-of-the-year value of $5, LTC, the 4th largest cryptocurrency by market cap, is currently trading near all-time highs of $300.
While some aspects of technical analysis (like the 10-day MA) suggest further upside, the stochastic oscillator and the RSI are ringing alarm bells in overbought territory.
The recent surge in the price of LTC is attributed to the backing brought to the table by Coinbase’s GDAX exchange.