Corrections are healthy for the strength of an uptrend because they shake out the excess exuberance and provide an opportunity to the traders who missed the bus earlier to make an entry at lower levels.
Buying against the prevailing short-term negative sentiment during a correction is not an easy task but it is generally the right thing to do if the medium-term trend is bullish.
Daily cryptocurrency market performance. Source: Coin360
Tops and bottoms are confirmed only in hindsight, hence, selling at the top or buying at the bottom is a difficult task. Instead, traders can consider buying after the price rebounds off a support level repeatedly.
Even these purchases are not foolproof because many times, the price jumps up a little, only to turn around sharply and break below the support. Therefore, traders should always keep a stop-loss to protect their capital.
Let’s study the charts to spot the cryptocurrencies that are showing signs of having bottomed out.
The bulls are attempting to defend the $9,835 level in Bitcoin (BTC) as seen by the long tails on the candlesticks of the past three days. However, they have not been able to push the price above $10,625, which suggests that buying dries up at higher levels.
BTC/USD daily chart. Source: TradingView
The short-term trend has turned negative as the moving averages have completed a bearish crossover and the relative strength index is in the negative territory. This suggests that the bears are back in the game.
If they can sink the BTC/USD pair below $9,835.20, there is a minor support at $9,540, which is close to the large symmetrical triangle and is also the target objective of the head and shoulders breakdown.
If this support also cracks, a drop to $9,000 and then to $8,000 is possible. Such a move will shatter sentiment and could drive away buyers.
This bearish view will be invalidated if the bulls can push the price above $11,000 and sustain it.
The rebound off the $308.392 level could not even reach the previous support turned resistance of $366 on Sep. 6, which is a huge negative. A weak rebound after a sharp fall suggests that Ether (ETH) is likely to face another wave of selling.
ETH/USD daily chart. Source: TradingView
If the bears sustain the price below $308.392, a drop to $288 is possible. This is an important support to watch out for because if this gives way, the decline could extend to $220.
The 20-day exponential moving average ($390) is sloping down and the RSI has dipped into the negative zone, which suggests that the bears have the upper hand.
This bearish view will be invalidated if the ETH/USD pair breaks out of the $366–$400 resistance zone.
The rebound off the $0.235688 support on Sep. 4 could not rise above the $0.268478 resistance, which suggests that the bears aggressively defended the breakdown level. Currently, the bears are attempting to resume the correction in XRP.
XRP/USD daily chart. Source: TradingView
If the XRP/USD pair sustains below $0.229582, the next support is $0.21, and if that also cracks, the decline could extend to $0.19.
The moving averages have completed a bearish crossover and the RSI is in the negative zone, which suggests that the bears have the upper hand.
This bearish view will be invalidated if the pair reverses direction and rises above the $0.268478 resistance. Such a move will suggest that the correction has ended.
Chainlink (LINK) has been swinging wildly inside the $8.908–$12.89 range for the past three days, which suggests a tussle between the bulls and the bears as they attempt to establish their supremacy.
LINK/USD daily chart. Source: TradingView
The 20-day EMA ($13.83) has started to turn down and the RSI is in the negative zone, which suggests that the bears have the upper hand.
If the LINK/USD pair breaks below the trendline, a drop to $8.908 is possible. This is the important support to watch out for because if this breaks down, a drop to $7 is likely.
On the upside, a break above $12.89 will be the first sign of strength. Above this level, a move to the downtrend line is possible. A breakout of this level will suggest that the correction is over.
The rebound off the $200 level fizzled out at $240.38 on Sep. 4 and the price again dipped back close to $217.55. If bears sustain Bitcoin Cash (BCH) below this support, a drop to $200 is possible.
BCH/USD daily chart. Source: TradingView
The 20-day EMA ($259) is sloping down and the RSI is close to the oversold levels, which suggests that the bears are in command.
A break below $200 will be a huge negative as this level has not been broken down convincingly since March 19. The next support on the downside is way lower at $140.
On the other hand, if the bulls defend the $217.55–$200 support zone, the BCH/USD pair could remain range-bound for a few days.
Polkadot (DOT) formed inside day candlestick patterns on Sep. 6 and today as the bulls attempt to stall the decline at the 61.8% Fibonacci retracement level of $3.8572.
DOT/USD daily chart. Source: TradingView
However, the rebound on Sep. 6 was short-lived as the bears are currently attempting to resume the decline.
If they can sink and sustain the DOT/USD pair below $3.8572, a drop to $3.0404 is possible. If this support also cracks, the pair will complete a 100% retracement and drop to $2.
Conversely, if the bulls can push the price above $$4.921, a move to $5.3147 and then to $6 is likely.
Bitcoin SV (BSV) has rebounded off the $146.2 support, which suggests that the bulls are defending this level. However, the bulls are likely to face stiff resistance at the downsloping 20-day EMA ($185).
BSV/USD daily chart. Source: TradingView
If the BSV/USD pair turns down from the 20-day EMA, the bears will once again attempt to break below the critical support zone of $146.20–$135. If they succeed, a drop to $100 and then to $77 is likely.
However, if the bulls can push the price above the 20-day EMA, a move to the 50-day simple moving average ($202) is possible. A break above this level can retest the $227 resistance.
Binance Coin (BNB) has been swinging wildly for the past few days, which suggests aggressive buying by the bulls on dips and selling by the bears on rallies as both attempt to wrestle the advantage in their favor.
BNB/USD daily chart. Source: TradingView
Both moving averages are flat and the RSI is just below the midpoint, which suggests a range-bound action between $18–$24 for a few days. If the bears sink the price below $18, the BNB/USD pair can drop to $14.80.
On the other hand, if the bulls can push the price above $24, the pair could move up to $27.1905. A breakout of this resistance will be a huge positive, with the next target objective at $32.
The bears did not allow Litecoin (LTC) to sustain above the breakdown level of $51 on Sep. 4, which attracted another round of selling that had pulled down the price to about $46 levels.
LTC/USD daily chart. Source: TradingView
The only minor positive is that the LTC/USD pair has formed long tails for the past three days, which suggests that the bulls are buying the dips.
However, if the bulls fail to push the price above $51 within the next few days, the bears will again attempt to sink the pair to $42 and then to $39.
This bearish view will be invalidated if the bulls can push and sustain the pair above the breakdown level of $51.
The bulls could not sustain Crypto.com Coin (CRO) above the breakdown level of $0.154322 on Sep. 5, which suggests profit booking by traders. There is a minor support at $0.14 below which a drop to the 38.2% Fibonacci retracement level of $0.127459 is possible.
CRO/USD daily chart. Source: TradingView
Barring the sharp decline on Sep. 3, the fall in the CRO/USD pair has been gradual, which suggests that traders are not dumping their positions yet. This increases the possibility of another attempt by the bulls to stall the decline.
However, the moving averages have completed a bearish crossover and the RSI is close to the oversold zone, which suggests that the bears have the upper hand in the short-term.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.
China aims to let foreigners use digital yuan at Winter Olympics in 2022
China’s central bank is looking to enable foreign athletes and visitors to use the country’s digital currency during the Beijing Winter Olympics in 2022, according to a top central bank official.
Li Bo, deputy governor of the People’s Bank of China, said that the upcoming Winter Olympics could potentially become the first test of China’s central bank digital currency, or CBDC, by foreign users.
“For the upcoming Beijing Winter Olympics, we were trying to make e-CNY available not only to domestic users, but also to international athletes and like visitors,” Li said Sunday at a CNBC panel at the Boao Forum for Asia. The bank previously announced its plans on testing the digital yuan at the event in August 2020.
The official said that the PBoC doesn’t intend to replace the United States dollar’s dominance as the world’s reserve currency. Li reportedly noted that the central bank is focused on the domestic use of the digital yuan.
“For the internationalization of renminbi, we have said many times that it’s a natural process and our goal is not to replace the U.S. dollar or any other international currency. I think our goal is to allow the market to choose and to facilitate international trade and investment,” he stated.
Despite the PBoC’s focus on the domestic digital yuan, China’s central bank is still exploring cross-border CBDC use. “At the same time, working with our international partners. Hopefully, in the long term, we have a cross border solution as well,” Li said. At the forum, Li also said that China’s central bank now views the major cryptocurrency Bitcoin (BTC) as an “investment alternative.”
After launching its first domestic digital yuan tests in 2020, China started cross-border CBDC pilots in collaboration with central banks in Hong Kong, Thailand and the United Arab Emirates in February 2021. On April 1, PBoC director of research bureau Wang Xin announced that China’s central bank completed the first cross-border pilots of the digital yuan with the Hong Kong Monetary Authority.
Chinese authorities have stressed multiple times that the government is not seeking to replace existing fiat currencies including the U.S. dollar with the digital yuan. “We are not like Libra and we don’t have an ambition to replace existing currencies,” Zhou Xiaochuan, the president of the Chinese Finance Association and former PBoC governor, said in late 2020.
As previously reported by Cointelegraph, the U.S. has taken a careful approach toward CBDCs due to the U.S. dollar’s status of the world’s reserve currency and other CBDC-related challenges like privacy. The European Central Bank is also still deciding whether Europe needs a digital euro, with ECB President Christine Lagarde expecting the digital currency to be adopted in four years, at the earliest.
UK government establishes central bank digital currency task force
Her Majesty’s Treasury and the Bank of England have begun preliminary central bank digital currency studies that could result in the creation of a national digital currency.
In a document published by HM Treasury, the exchequer announced the creation of a CBDC taskforce in collaboration with the U.K.’s central bank.
Jon Cunliffe, deputy governor of the Bank of England and Katharine Braddick, director general of financial services at HM Treasury will co-chair the task force.
According to the terms of reference document, the task force will synergize the efforts of all relevant statutory bodies in the U.K. regarding CBDC development.
As part of its duties, the task force will explore preliminary issues associated with the design, implementation, and operation of a CBDC in the U.K. The task force will also interface with stakeholders across academia, fintech and other relevant industries to identify the technological hurdles involved in creating a sovereign digital currency.
The joint HM Treasury and BoE task force will also monitor CBDC-related developments on the international scene especially as other nations are actively exploring their own central bank digital currency projects.
According to a BoE press release issued on Monday, the central bank will also run its own internal CBDC unit headed by Jon Cunliffe.
The establishment of the task force is yet another indication of the U.K. government’s focus on digital currencies and fintech in the aftermath of Brexit. In November 2020, Rishi Sunak, chancellor of the Exchequer said that Brexit offered an opportunity for the U.K. to revamp its financial services sector.
Since Brexit, Sunak has overseen a significant policy shift towards harnessing novel fintech innovations like CBDC and stablecoins. As previously reported by Cointelegraph, U.K. financial services minister John Glen has identified stablecoin regulations as the major focus of the government in the area of cryptocurrency regulations.
According to a report by Reuters, the U.K.’s financial market focus is also extending towards distributed ledger technology firms. Speaking during a financial industry conference on Monday, Sunak announced that the government plans to establish a fintech sandbox for blockchain startups.
China ‘endorses’ BTC investment: 5 things to watch in Bitcoin this week
Bitcoin (BTC) is beginning a new week grinding back to $60,000 as the shock of a weekend price crash settles.
After dropping to as low as $52,000 in a snap sell-off event, Bitcoin has spent the past two days slowly recovering its losses. What’s next?
Cointelegraph presents five factors to consider as a new trading week gets underway and cryptocurrency holders across the board nurse their wounds.
Stocks primed for “up only” short term
The macro picture is fairly stable in Asia and Europe, with United States markets yet to open.
A mixed picture greeted investors at the open, but volatility has been broadly absent, with only oil showing signs of more pronounced weakness.
As such, little impact on Bitcoin is to be expected from equities moves, these forecast to continue building on record highs in the coming weeks.
Russel Chesler, head of investments and capital markets at the Australian branch of crypto-friendly investment manager VanEck, captured the mood in a note quoted by Bloomberg.
“Our current view is that with short-term interest rates set to remain low for the medium term and our expectation that earnings will continue to increase, it is unlikely that the increase in long-term interest rates will trigger an equity market fall,” he wrote.
Coronavirus concerns still linger despite stocks’ relentless surge higher, with more reported official cases last week than ever before worldwide.
Economic responses continue to vary, with a patchwork of openings and closings characterizing countries’ latest attempts to control the outbreak.
Bitcoin recovers from $52,000 crash
In Bitcoin circles, the main talking point naturally remains the weekend’s events, which saw a sudden cascade of selling send BTC/USD down by $7,000 in a matter of minutes.
Bouncing at just above $52,000, the crash echoed several similar events this year, and Bitcoin managed to regain around 50% of its lost ground within hours.
Responses, however, are split between those who consider the volatility “business as usual” and more conservative voices calling time on the latest bull run.
As Cointelegraph reported, suspicions are focusing on a Chinese power blackout hitting hash rate, as well as rumored legal action by U.S. regulators against unnamed financial institutions related to money laundering.
In his own breakdown of what happened, popular statistician Willy Woo highlighted both China and skittish moves by futures investors as contributing to the losses.
“We just saw the single largest 1-day drop in mining hash rate since Nov 2017. The hash rate on the network essentially halved, causing mayhem in BTC price as it crashed,” he told Twitter followers.
In a sign that the future could see fresh sustained upside, Woo reiterated the “reset” in an on-chain metric, the spent transaction output ratio (SOPR), showing that long-term investors will likely soon stop selling altogether.
“The on-chain SOPR metric near a full reset. A classic buy the dip signal,” he added.
“In simple terms, profit taking by longer term investors is completing, very little sell power left unless investors want to sell at a loss from their entry price. Unlikely in a bull market.”
Fundamentals point higher
It’s not just SOPR — a whole range of Bitcoin network indicators and fundamentals are buoying bulls’ cause, even as BTC/USD remains below even February’s high of $58,300.
For Woo and others, particularly important are the transfer of funds to investors who have traditionally hodled, not sold — another classic trait of Bitcoin’s rise in recent months.
“Serious strong-handed holders are buying this dip. In the last 24 hours, over 200,000 Bitcoin became illiquid, a 3-year record,” fellow analyst William Clemente added Sunday.
“This illiquid supply increase is not only just dip buyers with no history of selling, but partially accumulation from 5-6 months ago of which those wallets have just crossed the ‘illiquid’ threshold for this metric.”
Lastly, around 13.5% of the total available Bitcoin supply has been active above $53,000, something which Woo says is confirming its status as a trillion-dollar asset. At around $53,800, Bitcoin’s market cap becomes a solid $1 trillion.
“This dip happened while unprecedented numbers of new users are arriving onto the network per day. There’s been a retail influx in the last 2-3 weeks,” Woo additionally noted, with total wallet numbers nearing 10 million.
Difficulty takes care of miner woes
A closer look at hash rate, which at one point dipped by almost half, shows that a recovery in line with price is underway.
According to rough estimates from on-chain monitoring resource Blockchain, Bitcoin network hash rate is already back above 150 exahashes per second (EH/s), having broken through the 200 EH/s barrier for the first time in history last week.
Miners leaving the network due to power problems leads to Bitcoin’s network difficulty decreasing to incentivize more to come online.
Further confirmation that the weekend’s issue was firmly temporary comes from difficulty forecasts — in two weeks’ time, when it next adjusts, difficulty will only drop by around 4%, a modest move which could yet be cancelled out altogether as miners return.
This balance between hash rate and difficulty is arguably the most important aspect of Bitcoin, one which allows it to govern itself and preserve security and functionality regardless of sudden events impacting network participants.
Chinese central bank praises Bitcoin and stablecoins
In another unanticipated event which is arguably yet to be fully appreciated by the market, China has given an unprecedented stamp of approval to cryptocurrency as an “investment alternative.”
Speaking at a conference organized by CNBC, Li Bo, deputy governor of China’s central bank, the People’s Bank of China (PBoC), broke ranks to validate both Bitcoin and stablecoins.
“We regard Bitcoin and stablecoin as crypto assets… These are investment alternatives,” he said.
The comments are surprising as despite being a center for Bitcoin mining activity, China has had a blanket ban in place on trading and transacting in cryptocurrencies since September 2017.
“Every country that bans Bitcoin eventually reverses that ban. You simply cannot be competitive in the 21st century economy without it,” Charles Edwards, founder of investment firm Capriole, responded.
“China is playing 4D chess. The last 3 days have made very clear they still dominate global mining. Slowly, slowly then all at once.”
The market barely reacted to this high-level affirmation of Bitcoin’s long-term potential. At the time of writing, Bitcoin is still hovering at $57,000, as yet failing to see an attack of familiar resistance levels.
Crypto has arrived.
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