November 24, 2020

A Crypto Investor

Just another Crypto Guys Blog

Price analysis 10/16: BTC, ETH, XRP, BCH, BNB, LINK, DOT, ADA, LTC, BSV

Chicago Mercantile Exchange’s cash-settled Bitcoin (BTC) futures trading products “contribute more to price discovery than its related spot markets,” according to findings in a new report by investment firm Wilshire Phoenix.

The increasing volumes of crypto derivative products highlight greater participation from institutional investors and this will likely be positive for the entire crypto space.

This is not unique to cryptocurrencies because even in most other asset classes, the derivatives markets lead the spot markets.

Daily cryptocurrency market performance. Source: Coin360

In a separate attempt to determine the valuation of Bitcoin, several experts from JPMorgan Chase opined that Bitcoin’s price is overvalued compared to its intrinsic value and the analysts suggested that BTC could face selling in the short-term.

The analysts consider Bitcoin to be a commodity and have calculated its marginal cost of production to estimate its intrinsic value.

While fundamentals do work in the long-term, short-term price action is usually dictated by sentiment and technicals. Let’s analyze the charts of the top-10 cryptocurrencies to determine the path of least resistance.

BTC/USD

Bitcoin (BTC) bounced off the $11,178 support on Oct. 15 but the bulls could not sustain the price above $11,500. This weakness could have attracted profit booking by the short-term traders and shorting by the aggressive bears.

BTC/USD daily chart. Source: TradingView

The bears are currently attempting to sink the price back below the critical support at $11,178. However, this level is likely to attract buyers because the 20-day exponential moving average ($11,081) is placed just below this support.

The upsloping 20-day EMA and the relative strength index in the positive territory suggest that buyers have the upper hand.

If the bulls can push the price above the downtrend line, it will be the first sign of strength. The uptrend could pick up momentum after the bulls can sustain the BTC/USD pair above the ascending channel.

Contrary to this assumption, if the bears sink the pair below the 20-day EMA, a drop to the support line of the channel is possible. A breakdown of the channel could spark further selling, which could result in a drop to $10,000.

ETH/USD

The bears are currently attempting to sustain Ether (ETH) below the moving averages. If they succeed, a drop to the uptrend line is possible. If this support also cracks, it will indicate a range-bound action for the biggest altcoin for a few more days.

ETH/USD daily chart. Source: TradingView

The flat moving averages and the RSI near 50 also point to a balance between supply and demand.

However, if the ETH/USD pair turns up from the current levels or the uptrend line, the bulls will again try to push the price above the overhead resistance at $395. If they can pull it off, it will complete an ascending triangle pattern that has a target objective of $481.608.

XRP/USD

XRP broke below the moving averages on Oct. 15 and is on its way to the critical support at $0.2295. Although the altcoin had formed a bullish inverse head and shoulders pattern, the bulls could not push the price above the neckline at $0.26 and the setup did not complete.

XRP/USD daily chart. Source: TradingView

The current price action of the altcoin is a good example of why traders should wait for the setup to complete before taking a directional bet. Buying in anticipation could quickly turn the trade into a loss.

The XRP/USD pair is currently range-bound between $0.2295 and $0.26, hence, the bulls are likely to buy near the support of the range.

A trending move will start after the bulls push the price above $0.26 or the bears sink the pair below $0.219712.