There are signs of increasing institutional interest in cryptocurrencies. Can this propel the markets to the next level?
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Market data is provided by the HitBTC exchange.
In the previous bull market, there was hardly any institutional involvement. Barring a few die-hard crypto enthusiasts, who were ‘hodlers,’ the rest of the traders were novices who wanted to jump on the get-rich-quick bandwagon. However, retail traders are easily influenced by a change in sentiment. Hence, the market overshot both on the way up and on the way down during the bear market.
A report by Nikolaos Panigirtzoglou, managing director of global market strategy at JPMorgan Chase, points to increased institutional interest in cryptocurrencies. The ratio of Bitcoin futures trading to actual volume of Bitcoin trading indicates that institutional investors are showing genuine interest. The volume of futures trading might increase further after the launch of the Bakkt platform.
United Kingdom-based interdealer broker TP ICAP now allows its clients to trade in Bitcoin futures offered by the Chicago Mercantile Exchange. Duncan Trenholme, TP ICAP head of digital asset market, believes that the new technology “could disrupt or impact other asset classes,” hence, they “want to be close to the developments.”
Bitcoin (BTC) is in an uptrend. It broke out of $9,053.12 on June 17, which invalidated the developing head and shoulders (H&S) pattern highlighted in our earlier analysis. The failure of a bearish setup is a bullish sign because it forces traders who have sold short in anticipation of a fall to cover their positions, resulting in a short squeeze.
The BTC/USD pair is currently rising inside an ascending channel and both the moving averages are trending up. The RSI has also climbed close to the overbought zone. This shows that bulls are firmly in command. The next target to watch on the upside is the psychological resistance of $10,000.
We anticipate the pair to enter a minor correction or a consolidation around $10,000. However, the rally has surprised to the upside and if the momentum remains intact, the bulls might push the price above $10,000 and towards $12,000.
The first sign of weakness will be a close (UTC time frame) below the support line of the channel. A breakdown of $7,413.46 will indicate a change in trend.
Ethereum (ETH) is currently range-bound. It has been trading close to the resistance of the $225.39–$280 range for the past two days. A consolidation near the top indicates strength and increases the possibility of a breakout. Both the moving averages are sloping up and the RSI is in the positive zone. This suggests that the path of least resistance is to the upside.
On a breakout and close (UTC time frame) above $280, the ETH/USD pair can rally to $322.06 and above it to $335. We expect some profit booking around these levels.
However, contrary to our assumption, if the pair turns down from the current levels and plummets below the 20-day EMA, it can drop to $225.39. A breakdown from this level will turn the trend in favor of the bears.
Ripple (XRP) is currently trading inside a symmetrical triangle. The next move will start either on a breakout or a breakdown from the triangle. After failing to break down of the triangle, the price has risen close to the resistance line of the triangle. The horizontal zone of $0.45 to $0.47919 might act as a resistance. Nonetheless, with both the moving averages sloping up and the RSI in positive territory, the bulls have the upper hand.
A breakout of the triangle has a target objective of $0.57259, above which the rally can extend to $0.6250. Conversely, if the XRP/USD pair turns down from the resistance line of the triangle, it can again slump to the trendline of the triangle. A breakdown of this level will indicate weakness. The trend will turn bearish on a breakdown of $0.35660. Traders can trail the stop loss on the long position to $0.37.
Litecoin (LTC) is an uptrend. Though the bulls have managed to sustain the breakout above the ascending channel, they are struggling to push the price above the overhead resistance of $140.3450. Nevertheless, both the moving averages are sloping up and the RSI is close to the overbought zone, which shows that bulls have the upper hand.
A breakout and close above $140.3450 will propel the LTC/USD pair towards $158.91 and if that level is also crossed, the next target is $184.7940. However, as the price moves up, the probability of a sharp correction increases. Therefore, traders can trail the remaining long position with the stop loss just below the 20-day EMA.
If the price breaks down of the 20-day EMA, it can dip to the next support at the 50-day SMA. The trend will turn negative on a fall below the support line of the ascending channel.
Bitcoin Cash (BCH) is in a weak uptrend. The 20-day EMA has started to turn up once again and the 50-day SMA is sloping up, which suggests that the bulls have a minor advantage in the short term. Above $450, the bulls will try to retest the recent highs of $481.99 and if this level is crossed, a move to the resistance line of the channel is likely.
On the other hand, if the rally falters at either one of the overhead resistance levels, the BCH/USD pair might correct to the 20-day SMA and below it to the 50-day SMA. The critical level to watch on the downside is $360 and below it the support line of the channel. If this zone breaks down, the pair can correct to $280.
The tight consolidation in EOS resolved to the upside. On June 15, the price closed (UTC time frame) above the overhead resistance of $6.8299 and triggered our buy suggested in an earlier analysis.
The next target on the upside is a rally to the resistance line of the ascending channel and if that level is crossed, a retest of the recent highs at $8.6503. The 20-day EMA has started to turn up gradually and the RSI has inched back into the positive zone. This suggests a minor advantage to the bulls.
However, if the EOS/USD pair fails to sustain above $6.8299, it will indicate profit booking at higher levels. A breakdown of the moving averages and the support line of the channel will indicate a deeper fall towards $4.4930. Therefore, traders can protect their long positions with the stop loss of $5.80.
Though the long-term trend in Binance Coin (BNB) is bullish, the short-term trend is shifting to a range between $28 and $38.6463356. A consolidation after such a sharp up-move is a positive sign.
If the BNB/USD pair breaks out of the overhead resistance at $38.6463356, the uptrend will resume. The next target to watch on the upside is $46.1645899. On the contrary, if the bears sink the price below the support at $28, a deeper correction is likely. Therefore, traders can maintain the stop loss on the long position at $28.
The bulls are attempting to resume the uptrend in Bitcoin SV (BSV). If the price breaks out of the overhead resistance at $237.390, a retest of the recent highs at $254 is probable. Both the moving averages are trending up and the RSI is in positive territory. This suggests that the bulls are in command.
A breakout of $254 has a target objective of $307.789 and above it $340.248. Contrary to our assumption, if the bulls fail to break out of $254, the BSV/USD pair might remain range bound for a few days. The pair will turn negative on a breakdown of the 38.2% Fibonacci retracement level of the recent rally.
Stellar (XLM) has held above the overhead resistance of $0.11507853. However, it is struggling to rebound above the downtrend line of the descending triangle. The moving averages are flat and the RSI is just above 50, which suggests balance between the bulls and the bears.
If the bulls push the price above the downtrend line of the triangle, the XLM/USD pair can rally to the overhead resistance of $0.14861760. A breakout of this resistance will complete an inverse H&S pattern that has a target objective of $0.22466773. Traders can wait for a close (UTC time frame) above $0.14861760 before initiating long positions. The stop loss for the trade can be kept at $0.1120.
Our bullish view will be negated if the price turns down from the overhead resistance and slips below the support at $0.11507853.
Cardano (ADA) has been forming a doji candlestick pattern in the past three days, which shows indecision among the bulls and the bears. The price is stuck between the 20-day EMA and $0.10. Both the moving averages have started to turn up once again and the RSI is just above 50. This suggests that the bulls have a slight advantage.
If the bulls push the price above $0.10, the rounding bottom pattern will complete that can carry the ADA/USD pair towards its target objective of $0.22466773. Hence, we have retained the buy recommendation given in the previous analysis. Contrary to our expectation, if the pair plummets below the moving averages, it will turn negative and can dip to $0.057898.
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Author: Rakesh Upadhyay