Market Insights: 24 Little Hours

Market Insights: 24 Little Hours
February 7, 2018 Alex

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Disclaimer: Not professional or financial advice

The Big Gun

Looking at the daily (1D) chart on BTC/USD, we can see that the daily volume from yesterday (Feb. 6th) was the highest in recent history. The volume level shows some serious support at the $6,000 level. There are no guarantees in crypto, though, and so we can’t say with certainty that the price will not drop further.

We have seen a surprising bounce back in just 24 hours, however. This was perhaps bound to happen (insofar as you can make that claim), since we’ve seen BTC’s price drop so quickly in the recent past.

All of that said, it might be difficult for BTC to immediately bounce straight back up to create a sort of V, as mentioned in yesterday’s update. It could happen, but there’s a good chance there will be some sideways action and consolidation. Charts typically go straight up to create a larger parabolic move, or they consolidate before entering the next big parabola.

Keep an eye on the area between ~$7,500 and ~$10,000, as this might be a consolidation zone. While we’re seeing lots of volume today, a more conservative view might say that there is still something that needs to be worked out in the chart before we see a big move upwards.

Lite Moves

Looking at the daily LTC/USD, we can say that more issues have been worked out. LTC looks like it has better potential to perhaps move down a little more, and then come up in a big power move.

A strategy to consider is to move bids over to LTC (if you have any on BTC) if you believe it’s more likely to pop.

Building Steam

It seems Ethereum is seeing more momentum. The draw-down it’s seen is comparatively (that is, as compared to Litecoin, as an example) small. There are also still many ICOs being built on it, and updates we’re expecting (ex: Casper Protocol).

If you are looking for a bounce, and what will potentially get you the highest ROI, LTC and ETH might be better bets. Do you own research when considering this.

Money On The Sidelines

Money that goes into crypto tends not to leave. This is quite unique. For the most part, when people have sell their crypto for fiat (or Tether), they don’t increase their allocation into other, more traditional assets. The money mainly sits in fiat as they are waiting to buy back in at a better price.

In the past 48-72 hours, we’ve seen almost 100 Billion dollars leave and come back in. The market cap has gone from ~280 Billion on the weekend to over ~380 Billion today.

A lot of the price action, especially in alt coins, is driven by the same people (that is, the same people who are selling are the same people who are buying back in). This lies in contrast to traditional markets wherein people sell, and new buyers come in to buy into an asset class because it’s undervalued.

It at least seems that in crypto, money simply goes on the sidelines, and people wait to buy back in. For the market cap to change with such speed implies that the money is readily available, there to be deployed

Alts As Insight

If you look at some alt coins on Bittrex or Binance and sort by % Change, you can see what’s pumping. And if you take ICX (Icon) as an example, you can see it’s had one of the largest swings, or one of the largest drops and subsequent recoveries. This could mean that the same people who sold it are the same people buying it back.

When a currency has a relatively large market cap and sees huge swing(s), it could be because it has a large community, made up in part by inexperienced investors. When the market is down, their beliefs are tested, and they sell to in an attempt take profits while they can. But when they see the asset going back up, they buy back in. It’s common for people to buy and sell the same things, not to be constantly researching and buying new currencies.

When looking at price action, it’s always good to think about where the money is coming from, and where it is going.

PyeongChang 2018

The Olympics in South Korea will be kicking off soon. It’s interesting here to think about geopolitical tension surrounding South Korea and the area. Many, many people will be watching, and if some of this tension is somehow highlighted at the Olympics, this might be reflected in the markets.

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