Bitcoin’s Recovery Avoids Possible Bear Trap
Bitcoin pulled itself back above $8,000...undoubtedly disappointing bears waiting for even more drops, though surely reassuring HODLers. But that doesn’t mean the bulls have it – Bitcoin may not be showing bearish flags on all the indicators, but the most basic bearish indicators – lower highs, lower lows – have yet to be invalidated. But that may be just a matter of time – Bitcoin is growing, albeit anemically.
So is the correction over? Woah, hold your horses. It is true that if the price manages to hold above $8,000, then the bulls may reassert themselves, but we’re not quite there yet. There are signs that momentum will soon return to the Bitcoin market – institutions have been taking long positions in the CME futures market once more.
What about volume? It hasn't entirely collapsed, but trading volume is still markedly lower than it was during the summer’s bull run. However, there are signs that it may recover – as investors recoup after the blows dealt with the Telegram TON coin and Facebook’s Libra. Expect Bitcoin volatility and volumes to return to a healthy level.
Are there are any big obstacles for the bulls to overcome? A big one, with the poetic name of the death cross. Despite being on the daily chart, not the weekly, where it’s more explanatory, it still suggests that Bitcoin’s recovery will be unable to break $8,800.
Wut We Think: Institutional interest, represented by volumes on futures exchanges, is an excellent indicator of price. And the growth of long positions, as well as the uptick in trading volumes for Bakkt signals that Bitcoin’s recovery hasn’t quite stalled. But if Bitcoin fails to hold above $8,200, then drops down to $6,500 are not out of the question.
Cryptos Are Poised for Mass Adoption Despite Libra and Telegram
It’s been a bad week for crypto projects with delusions of mass adoption...like Facebook’s Libra and Telegram’s TON coin. The former is still facing strong regulatory headwinds, while the latter’s hearing following an emergency injunction has been delayed to 2020. But that doesn’t mean that mass adoption is dead.
What’s keeping the dream alive? Retail. Namely, both e-commerce and brick-and-mortar are rolling out Bitcoin or crypto payment systems. And not just in a few traditionally crypto-friendly jurisdictions – but around the world. The inability to use crypto for every-day tasks has been the biggest obstacle for crypto adoption, but that may be changing.
Buy a coffee with Satoshis: If there’s one silver lining from the narrowing of Bitcoin volatility for the past year or so, is that the currency is finally becoming more attractive to use for basic transactions like buying coffee or a pair of shoes.
We're still in Bitcoin’s early days: Despite Bitcoin’s age, crypto is still an incredibly new technology whose ramifications and use-cases are yet to be fully developed. And retail is no different. Retailers experimenting with crypto are still a pretty small group.
Wut We Think: Crypto with retail is a laudable goal that would provide momentum to rocket crypto from niche trading status to worldwide convenience. But there’s a way to go, and it’s not clear that today’s volatile crypto like Bitcoin and Ethereum will be the ones to make it. But at the very least some retailers are willing to take that risk and help pave the way for further expansions.
Trading Spotlight: Moving Averages
Moving averages are some of the most common indicators used in technical analysis. By getting rid of the noise caused by short-term price fluctuations, they provide a way to gauge things like trend directions and support and resistance. The two most common versions of a moving average are the simple moving average and the exponential moving average, which differ in the way they weigh prices.
Moving Average: A moving average is a lagging indicator that examines the price of a security or asset over some period of time. Simple moving averages are obtained by taking the average of prices over a set time-frame, such as 20-day, 1-month, and so on. An exponential moving average is a bit more complex but smoother. The use of MAs can help confirm trend directions by examining crossovers between short-and-long-term moving averages.