Cryptocurrency Analysis

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Long shadows and a dubious stop: Results of the cryptocurrency market for February 23, 2021

The decline in the cryptocurrency market slowed down at the end of the day. Long shadows appeared on the four-hour charts of the top coins, indicating a respite. For how long? It's not clear yet. However, it is possible to identify the technical guidelines. It is not the time to buy now, even assuming that all coins will return to their previous highs over time.

Bitcoin, after the fall, consolidated above the local level of 48178.13. All the bodies of the four-hour candles closed above this horizontal, which creates the prerequisites for a cautious recovery of BTC/USD. The nearest technical target, now ascending, can be considered the level of 61.8 on Fibo Expansion. But all this is still very approximate. It is possible that the main cryptocurrency will return to the fall at any time.



Bitcoin Cash has stalled in the range of 465.48-508.94. Now, if BCH/USD quotes manage to gain a foothold above the horizontal at 508.94, the level of 538.35 should be considered as a target for recovery.



Ripple, as expected, held above the support range of 0.4348-0.5564. But the level of 0.3512, which is considered as the nearest technical benchmark to the south, has not yet been reached. If the price breaks through it and consolidates higher, the XRP/USD quotes will open the way for further strengthening to 0.5564.



Ethereum also held in a wide range, limited by the support level of 1436.48 and the resistance, which is the level of 61.8 on Fibo Expansion. Now, the target for growth is the local level of 1697.27, marked with a red dotted line.



Litecoin has not broken through the level of 171.25 and is now trading above it. The upper limit of the technical range for LTC/USD is now the horizontal 186.48. However, it may not be reached if the level of 171.25 is truly broken in case of a resumption of decline.





Ekaterina Kiseleva
Analytical expert
InstaForex Group © 2007-2021

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Bitcoin loses more than 20% in two sessions

In our last BTC/USD analysis we noted that Bitcoin was reaching an important Fibonacci target at $56,000 area. We warned traders to be cautious as this area could very well be an important top. Trend remains bullish, but with high volatility being the norm in cryptocurrencies, traders need to adjust their strategies.



BTC/USD is falling sharply below $50,000. After such a parabolic rise in price, it should not come as a surprise to see sharp declines. Major support is now found at $45,000 and next at $34,000.



Using the Ichimoku cloud indicator we identify the two important support levels. The first level is where we find the kijun-sen(yellow line indicator). If this level is broken we should expect BTC/USD to move lower towards the Daily Kumo (cloud) at $34,000. The trend remains bullish but with signs of weakness. Resistance is at $51,585 and recapturing this level will be key for the short-term trend. A pull back towards the cloud and $34,000 is not out of the question, so bulls need to be cautious. I prefer to be neutral than bearish as the major trend remains upward.





Alexandros Yfantis
Analytical expert
InstaForex Group © 2007-2021

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What is the reason for the sharp decline of cryptocurrency?

Bitcoin's numerous value records marked the previous weeks. The cryptocurrency market positively perceived the constant growth of the main digital asset. However, it stopped reacting and started to decline after bitcoin broke through the level of $ 58 thousand. This contradicting action served as the signal for the incoming market correction.

For the past three days, Bitcoin sharply fell to $ 46 thousand. Thus, this negatively affected the cryptocurrency market. Today, the main digital coins began to recover their positions by 12:00 Universal time, although it slipped by almost 25% in the morning. The XRP token declined to $ 0.4, but began to gradually rise in the afternoon with minor disadvantages.



Ethereum fell to $ 1400 and began to recover its positions only in the last few hours and consolidated at $ 1535. It is now slowly moving up, settling at $ 1520 area.



Litecoin, in turn, stopped at $ 166 and then returned to its previous level after slightly rising to $ 175. It is now making an attempt to consolidate in the range of $ 170 - $ 175.



Although most forecasters expected a price correction in early spring, the question arises: what caused the market drawdown and liquidation of the record volume of positions on crypto exchanges today? The reason lies in Bitcoin's worsening situation, which affected the price correction and led to a market collapse. The final breakthrough of the leading cryptocurrency has already occurred under unfavorable circumstances: problems with the Tether stablecoin and outright criticism from Elon Musk, JPMorgan experts and the US Treasury Secretary.

Due to the unpleasant news, Bitcoin failed to consolidate in safe positions and declined by $ 10 thousand, dropping by 12%. The main issue of the cryptocurrency is high volatility, which negatively affected the coin's quotes when it tried to settle at the level of $ 55 thousand. Moreover, there are several hints pointing to the correction in the digital asset market for about a week: the market collapsed several times in three days, the main altcoins did not show significant growth with good Bitcoin positions. All this provoked a sharper-than-expected market decline.

At the same time, the cryptocurrency market plummeting by 25% was possible due to the coincidence of two factors: Bitcoin's unhealthy growth in a negative economic situation and the forthcoming market correction. Such a surge cost traders more than $ 4 billion, but there is no fundamental reason for the price correction that would negatively affect market's development in the future. Rather, this happened for technical reasons and a specific economic situation, which contributed to the quote's decline.




Artem Petrenko
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Bitcoin Testing The Buyers!

Bitcoin plunged to 44,888 today after failing to stabilize above the Pivot Point (53,908) yesterday. Everyone's wondering how long the drop could be? Personally, I still believe that the decline could be only a temporary one if the price stays above the immediate, near-term uptrend line.

It's traded back at 49,519 level at the time of writing showing strong buyers and strong demand. It remains to see if the price stabilizes above the uptrend line which represents a potential buying signal after the amazing drop.


BTC/USD ATTENTION AT SUPPORT!



BTC/USD rebounded from above 150% Fibonacci line, 46,000 psychological level, and now it flirts with the $50,000 psychological level again. I've told you in my previous analyses that it could come back to pressure the black uptrend line after failing to stabilize above the second warning line (WL2).

A false breakdown through the uptrend line and below the 38.2% retracement level could add a buying opportunity. Technically, Bitcoin could register a larger drop if it closes and stabilizes below the uptrend line.


TRADING TIPS!

Only false breakdowns through the black uptrend line could represent a good buying opportunity. So, a major bullish engulfing here or a false breakdown with great separation, a pin bar, brings a bullish signal.

Bitcoin could resume its major uptrend if it comes back and stabilizes above 50,000 if the breakdown is invalidated.

On the other hand, closing and stabilizing below 50,000 and under the black uptrend line signals a further drop towards 41,986 - 40,000 area.




Ralph Shedler
Analytical expert
InstaForex Group © 2007-2021

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BTC analysis for February 23,.2021 - First downside target at the price of $48.230 has been reached. Next downside target set at $42.000

Further Development



Analyzing the current trading chart of BTC, I found that BTC reached our first downside target at the price of $48,230.

Key resistance is set at $58,000




Petar Jacimovic
Analytical expert
InstaForex Group © 2007-2021

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Trading plan for Bitcoin for February 23, 2021



Technical outlook:
Bitcoin had rallied through all-time highs over the weekend around $58,300 mark before reversing sharply lower. The crypto is seen to be trading almost 20% lower around $48,870 mark at this point in writing and is expected to continue printing lower lows and lower highs. A potential top seems to be in place at $58,300 mark and a meaningful correction should be underway towards $37,000/38,000 at least.

Immediate resistance is seen at $58,300 levels, while support comes in around $29,000 levels, the previous bottom as depicted on the daily chart here. Please note that fibonacci 0.382 retracement of the entire rally between $3,850 and $58,300 is seen around $37,900 mark and Bitcoin might find interim support in that zone. The overall uptrend might still remain intact but a meaningful correction cannot be ruled out.

Looking at the wave structure since $3,850 lows registered in March 2020, Bitcoin might have completed a religious bull run and terminated around $58,300 mark. Probability remains for a drop until fibonacci 0.618 retracement seen towards $25,000 mark, before finding support again. Also note that trend line support is also seen around the same zone and it could provide enough bounce. Only a break below the trend line would indicate that Bitcoin is heading towards a major reversal.


Trading plan:
Remain short, stop @ $60,000, target @ 37,000

Good luck!




Oscar Ton
Analytical expert
InstaForex Group © 2007-2021

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Colossal losses of traders and a sharp decline in the market: causes, consequences, and the uncertain future of bitcoin

Bitcoin made a real breakthrough in February 2021 after repeatedly rewriting the record of maximum value. The interest of large investors, the development of software to expand the possibilities of cryptocurrency, as well as wide publicity in the global media have caused a significant increase in the price of bitcoin. However, many experts agreed that such a sharp jump in the price of the main digital asset is not justified and a price correction will soon await the cryptocurrency.

As analysts at JPMorgan and Elon Musk suggested, the price of bitcoin turned out to be overvalued, and in the past few days, the market has been rapidly adjusting the quotes of bitcoin. Having reached a record high of $58,300 on the weekend, bitcoin began to fall rapidly, and over the past three days has fallen in price by $10,000. The main crypto asset has leveled off a little and holds indicators at $48,400. Over the past day alone, the cost of bitcoin fell by 12%, which caused colossal losses for retailers - more than $4.4 billion.

Due to the cryptocurrency decline, exchanges have liquidated the positions of 466,000 users. The largest loss of a single trader was $20.6 million. Almost 90% of closed trades were long, which suggests that traders were hoping to increase their profits, counting on further growth in major cryptocurrencies. Transactions for $2 billion were paired with bitcoin, another $1 billion in closed positions on Ethereum.



The sharp drop in the price of bitcoin turned out to be very painful, but necessary for further growth. Despite the huge losses for traders, the price correction pacified the fervor of bitcoin, which clearly did not match the price of $58,000. The continued growth of the cryptocurrency was associated with the situational mood of investors, who were inspired by the Tesla Motors case and began to storm the cryptocurrency market against the backdrop of good economic indicators. In this regard, bitcoin "suffered" more than the others, because most of the investments were directed specifically to it.

Bitcoin showed signs of independent growth and even some resilience. However, the past few weeks have begun to transform this advantage into a clear disadvantage. The first digital asset could become hostage to investment and economic sentiment in the global financial markets. Its growth and development would be directly dependent on the current indicators of economic growth, and, as a result, the asset would turn into a seasonal investment instrument showing abnormally unstable numbers.

The market correction, to some extent, interrupted this vicious circle, allowing bitcoin to take the pause necessary for its further growth. We assumed that the growth of the first cryptocurrency would continue until the end of February, but the digital asset significantly outstripped the wildest expectations, reaching $58,000 within a few days. There is every reason to believe that bitcoin will reach $67,000 in the spring. The more global growth of the first cryptocurrency and the entire digital asset market will depend on investor behavior and future Visa and Mastercard projects, which could stall if bitcoin continues to show dependence on sharp and short-term injections from large companies.




Artem Petrenko
Analytical expert
InstaForex Group © 2007-2021

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Dramatic Tuesday for cryptocurrencies: Morning Review on 02/23/21

Yesterday, the cryptocurrency market began a downward correction. Closer to the middle of the European trading session on Tuesday, the fall turned into "falling knives". Over the past four hours, the top coins have lost almost as much as they did all of Monday. The daily decline of bitcoin is estimated at almost 19%, Ethereum has already lost 23.83%, Ripple has fallen by 30.03%, Bitcoin Cash has declined by 32%, and Litecoin has weakened by 23.63%. The main question that now interests traders is where the stop will be.

Bitcoin has dropped to $ 45,000 per coin. The quotes at the moment broke through the local support level of 45553.17, after which they partially recovered. From what point the big players will start buying out the cheaper bitcoin, it is still unclear. As the nearest support for BTCUSD, it is worth considering the horizontal 41980.24, if the current level of 45553.17, marked with a red dotted line is broken.



Bitcoin Cash broke through the level of 465.48 during the fall, but did not gain a foothold above it. This is for now, as the weakening of quotations may continue. Against this background, it is worth considering the 406.38 horizontal as the nearest support for BCH USD.



Ripple fell, reaching almost the support level of 0.3512. So far, some of the losses have been restored, and XRP USD quotes have returned to the range of 0.4348 - 0.5564. The probability that the pair will stay in this range is low. Therefore, the level of 0.3512 should be considered as the nearest technical reference point to the south.



Ethereum fell below the level of 1369.23 today. After the losses were partially returned, the price of ETH USD moved into a wide range, limited by the support level of 1436.48 and the resistance level of 61.8 on Fibo Expansion. Whether its lower bound will be able to stand, and for how long is an open question. So far, the horizontal of 1369.23 remains an actual benchmark for the decline of the second cryptocurrency.



Litecoin fell below the level of 171.25 today, but then returned to the corridor above it. Now the local resistance for LTC USD is the horizontal 186.48. If the decline resumes, the pair can move south up to the support level of 146.04.






Ekaterina Kiseleva
Analytical expert
InstaForex Group © 2007-2021

[IFX_Selena]

Evaluating cryptocurrency through technological breakthroughs



Global e-commerce was rising by 19% per year and managed to reach $ 6.5 trillion before 2020 ended. The digital/mobile wallets were rapidly becoming the preferred payment method in e-commerce, although they were forecasted to fail. But now, they are projected to occupy 52% of the market by 2023.

In this context, blockchain technology and crypto assets began to gain popularity again. As the trade war between the US and China strengthened in 2019, governments around the world began to explore the possibility of digital currencies in response to the growing political and economic instability caused by the fluctuations in the US dollar and its impact on international trade. Moreover, the younger generation found the financial technology world more attractive and promising, since blockchain technology ensures data security and reliability.

Some cryptocurrencies/tokens, such as Bitcoin, have started to provide various types of value proposition as an investment in an asset that has generated large returns. At the same time, the majority hailed the underlying blockchain technology as revolutionary. It should be recalled that the cryptocurrency has been heavily criticized due to its growth.

Elon Musk, Tesla's CEO and Bitcoin investor, warned people not to invest their savings in cryptocurrency. A good investor who understands how the crypto ecosystem functions always advises investing only 1-5% of their disposable income in it.




Vitaly Kolesnikov
Analytical expert
InstaForex Group © 2007-2021

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The Bitcoin sale has begun. Hedge Fund Trading Level



The sell-off of bitcoin on Monday is a sign that the increase in the price of bitcoin this year has prompted some investors in digital assets to take profits.

The price of bitcoin fell by 8% on Monday, and it was the biggest decline in a month.

According to the analytics company Glassnode, about 40,000 BTC (worth $2.1 billion) have been transferred to major crypto exchanges since Friday, leading to an increase in bitcoin reserves to levels not seen since late January.

CEO of South Korean cryptocurrency company CryptoQuant Ki Young-ju told CoinDesk that the bitcoin flow was mostly going to the US company Gemini, which received about 34,000 BTC before the market sell-off on Monday.

The blockchain data exhibits a flow of about 28,000 BTC to Gemini around 11:00 UTC. According to CryptoQuant, on Sunday (19:00 UTC) New York time, the price of the cryptocurrency reached the level of $58,000.

Monday's price decline coincided with Treasury Secretary Janet Yellen's speech to the New York Times' DealBook DC Policy Project that bitcoin is not widely used as a "transaction mechanism."

According to Yellen, cryptocurrency is an "extremely inefficient way" to conduct transactions, and "the amount of energy consumed to process these transactions is staggering."

"Fixing positions can lead us to the $40,000 - $42,000 level, which is the trading level of a hedge fund," Singapore-based QCP Capital said on its Telegram channel. "If the $40,000 level doesn't hold, the bulls will lose."



How deep will it go? According to David Lifshitz, chief investment officer at the Paris-based quantitative trading company ExoAlpha, if things turn bad in the short term, bitcoin may see a price of 30,000, and this already looks like an absolute bottom.

CoinDesk's Omkar Godbole notes that such a drop is a macroeconomic factor that can explain the change in prices. US inflation-adjusted bond yields are rising, with real yields turning positive for the first time since June 2020. This supports the bullish sentiment for the US dollar, and investors, reducing risks, are investing in treasury bonds. When profitability rises, this is exactly a bearish case for gambling like Bitcoin and stocks.




Andrey Shevchenko
Analytical expert
InstaForex Group © 2007-2021