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Round Table: Is Crypto Bullishness Back Or Is This Just A Short-Term Trend?

By CryptocurrencyMay 03, 2018 07:05AM ET
Round Table: Is Crypto Bullishness Back Or Is This Just A Short-Term Trend?
By   |  May 03, 2018 07:05AM ET
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by Diane Freeman

Every other week we've been asking a selection of our contributors for their opinion on what we believe are some of the most pressing market-focused questions of the week. This time we wondered:

With Bitcoin back trading above $9000 and the other cryptos also moving higher during April, has bullishness returned to the cryptocurrency market or is this a short term-trend?

  • Poor liquidity will move price a lot in the short-term,
  • A new medium-term bull market will be official only when price charts confirm them
  • Most cryptos, including Bitcoin still have very bullish long-term charts, including Bitcoin.
  • Bitcoin and the cryptos could see another major rally that peaks a year or more from now before we see a possible 95%+ crash.
  • Downtrend likely over, Bitcoin can reach levels that seemed unsurpassable in February and March

Tom Luongo

I’m impressed with the performance of certain coins in the crypto space. EOS, in particular, has been spectacular as its development team keeps hitting and exceeding its milestones.

Bitcoin itself hasn’t been all that impressive simply because it is still, from a medium-term perspective, in dead-cat-bounce territory, running into strong resistance at the 23.6% Fibonacci level on the weekly chart.

That said, it has put in an impressive three-week rally to get to this point. I’ll be more comfortable calling a longer-term trending move if Bitcoin can get through this resistance around $9270 and make a push towards $11,300, the 38.2% Fibonacci line. I’m not a huge fan of Fibonacci levels but the crypto-markets tend to follow them very closely, so my opinion of them is irrelevant.

Cryptos like Ethereum ignored that first Fibonacci level and headed to the 38.2% line at around $765. But, then again, Ethereum's run last fall was far less impressive than Bitcoin's or Ripple's. So, the technical picture has to be attenuated for that.

All in all, I would say that bearishness is leaving the sector thanks to the end of U.S. tax season which forced a lot of liquidations and allowed for professionals to, rightly, keep pressure on the market and force out the weakest hands.

That said, there are a number of coins still languishing below important technical levels, including Litecoin, for example, which indicates that there is still a lot of work to be done in rebuilding the bull case those coins that did so well in 2017.

Remember, Litecoin began 2017 at just over $4.00. Today it’s mired in a bear market at around $150? In investing and trading time perspective is paramount. So, while the short-term trading charts (daily and weekly) are turning bullish and provide some trading opportunities, the longer-term charts, monthly, quarterly, yearly are still bullish.

When you look at the monthly chart of Litecoin, all of 2018’s trading action fits with the opening and closing prices for December 2017. Technically there has been no reversal signal given in Litecoin even though it’s trading 65% below it’s all-time high.

But, from a quarterly perspective it would now take a close in June below $47.00 to constitute a two-bar quarterly reversal. That, to me, would signal an end to the long-term prospects for Litecoin.

I think investors should be looking at coins/tokens they have operational and development confidence in that have put in strong bottom or double-bottom formations here in 2018 that are below the first Fibonacci level (23.6%) as traced from their December high to their Q1 low.

Those will be the coins that likely out-perform the rest of the market when the bellwethers have finished repairing the worst of the technical damage. And any coin/token that is still flirting with its Q1 low without a strong development roadmap needs to be reviewed/jettisoned from their portfolio.

In short, investors are returning to the space. Poor liquidity will move price a lot in the short-term but that doesn’t constitute a new medium-term bull market until the price charts confirm them. Most cryptos still have very bullish long-term charts, including Bitcoin.

Harry Dent

The crypto ship is sailing in rough seas at the moment. My advice? Stay away for now. Preserve your capital for after the major crash, and then pick winners from the bones

The Bitcoin and cryptocurrency trends seem to be following the path the internet took back in the late 1990s. The broader tech bubble started in late 1994, but the internet bubble came at the end and expanded by more than 8 times between late 1998 and early 2000. Then it crashed 93%. Bitcoin has come at the end of the second tech and internet bubbles.

It has been up by more than 20 times since late 2016. And so far, it’s crashed 70% to $6,630 from $19,600 in the first two months. As of early May it has rallied back near $10,000 with resistance around $11,200 at the last highs in March. Bitcoin has bubbled up three times now. Once in 2011, again in 2013, and in 2017 as well. It went up 59 times, going from $0.05 to $29.50 between July 22, 2010 and June 8, 2011, and then it crashed 93% into November 18, 2011 – just five months.

Michael Terpin, who spoke at our Irrational Economic Summit in Nashville last year, talked about being in Bitcoin when it was just $0.10. Bitcoin bubbled again when it went up by 561 times, from $2.05 to $1,329 from November 18, 2011 to December 4, 2013. From there, it crashed 86% into January 14, 2015. During this latest bubble, it’s gone up 122 times, and over 20 times in just the last year when it bubbled the most. So, a 90%-plus crash this time around seems highly likely.

The worst-case scenario is that it continues its current rally up to that resistance point around $11,200 and crashes at least 70% again, back to around $3,400 or all the way to the late 2016 lows (where this bubble really started), between $800 and $1,000. That’s a loss of 95% to 96%... a slightly greater loss than the dot-com crash because Bitcoin has bubbled more and faster. In fact, the Bitcoin and cryptocurrency bubbles have now exceeded even the extreme tulip bubble of 1635-1636.

The best case scenario is that this was just the Elliott Wave 3rd wave peak and the correction was the 4th wave down. In that case Bitcoin and the cryptos could see another major rally that peaks a year or more from now much higher before we see more like a 95%+ crash… but it is coming one way or the other.

I was the keynote speaker at Michael Terpin’s CoinAgenda Caribbean Conference in Puerto Rico recently. Most of the people offering investments there claimed that it was NOT for the everyday investor… they know how volatile this market is.

So, again: don’t jump onto this ship just yet. Wait until we’ve seen the seemingly inevitable crypto crash to its conclusion, and then look to buy the larger, stronger survivors.

Ethereum is likely to be one of those, and Bitcoin as well. In fact, just like what happened after the internet crash, there will be several larger companies – that have something real to offer – that will survive.

If you had bought when we signaled a bottom in the tech wreck in early October 2002, Apple would have been up by 262 times into the recent January 2018 top. For Priceline, that gain would be 224 times. For Amazon, 78 times. Amazon actually bottomed in 2001 and if you had bought then, the gain would have been 300 times…but it took 16 years to get there. That’s still stellar long term returns. Alphabet, which IPOd in 2004, would have increased in value by 21 times.

That’s what we’ll be looking for if Bitcoin and cryptos see a 90%-plus crash ahead. In the meantime, let the crypto traders risk their money on this extreme bubble. It’s too late and volatile to buy here and I would be hedging my gains if we do see $11,200 or a bit higher near term.

Kiana Danial

Summary: I believe we still could see another pullback towards $6,504, $4,992 and even $3,482 respectively for Bitcoin before the real new uptrend begins. However, from a technical point of view, we could see $11,525 reached first.

The cryptocurrency market appears to be in the process of recovering. Bitcoin has confirmed above the daily Ichimoku cloud, a bullish signal that we use when it comes to technical analysis. Other bullish signals for the cryptocurrency includes the Tenkan/ Kijun line crossover, and the Saucer Bottom pattern which appears to have reversed last month’s downtrend at the support level of $6,504.

However, since it broke above the neckline of the Saucer Top and the upper band of the daily Ichimoku Cloud at around $8,875, it has been consolidating right below the $10,000 resistance. If this really proves to be the reversal we’ve been waiting for, we could see BTC/USD reach $11,525 and $13,535 respectively in May.

These are all good.

Earlier this week I discussed how cryptocurrency bulls can achieve their goals even faster, by getting more women interested in the industry, read more here.

Viktor Shpakovsky

There are several factors demonstrating that the downtrend is likely to be over.

First of all, intensive SHORT selling. For Bitfinex exchange, the short volume has dropped twice since mid April. Secondly, the rising activity of the Bitcoin network. The number of transactions has increased again up to 200,000 and even 250,000 in 24 hours.

The average block size is also growing. Finally, another factor is the media reaction in the background. The market now reacts much more calmly to negative news. Thus, for example, it totally ignored the information that the Mt. Gox trustee resumed cryptocurrency sales. The price also didn’t drop in response to Ethereum co-founder Vitalik Buterin’s boycott of the major Consensus Conference or his refusal to release frozen Parity funds due to the vulnerability and even critical vulnerability of multiple smart contracts of ERC-20 tokens .

We are expecting follow-on price increases. The most important thing is how the main cryptocurrency is going to change. Bitcoin can reach resistance levels pretty soon that seemed unsurpassable in February and March.

Round Table: Is Crypto Bullishness Back Or Is This Just A Short-Term Trend?

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Round Table: Is Crypto Bullishness Back Or Is This Just A Short-Term Trend?

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Comments (2)
Eli Murphy
Eli Murphy May 03, 2018 1:17PM ET
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Read about half of this then couldn't go on any further. I really hope others reading this article take it with a grain of salt. Although stocks and crypto may seem similar they're completely different concepts. I've been invested in both for some time now. This article carries a dangerous misleading message to people about crypto. Do your own research everyone, don't even listen to me much less this guy.
aston ridgway
aston ridgway May 03, 2018 9:09AM ET
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You miss the point big time. A crypto currency is not an asset that deliver dividend. It is a mean of exchange. Speaking about bubble for a Crypto is like speaking about the value of the $ (225 Trillions). Should the total value of the $ be back to 300 Billions ? LOL and Non sense. Crypto is not stock or Bond (no forward return to calculate), its value just depends of what people think the value should be !! if tomorrow nobody uses $ anymore but crypto then its total value will jump to 225 Trillion (against 600 Billions today) !!
Tony Rodriguez
Tony Rodriguez May 03, 2018 9:09AM ET
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