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Mar 13, 2018
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The big selling trend continues in the cryptocurrency world. Since late January we’ve seen extreme volatility, big selling and some bull runs. By February, Bitcoin had dipped with around 60% from its all-time high in December. Also there were lots of controversial and negative news that hit the market and whatever progress was made.
Bitcoin’s price drop even affected its popularity in Google searches. The number of people searching for it on Google decreased drastically as shown on Google Trends. A reason for this can be the increasing number of people searching for cryptocurrencies in general. A lot of people are now searching for information about the industry in general, not only about Bitcoin.
The negative news almost broke the strong bear grip that was holding the prices together. The prices of many of the leading cryptocurrencies broke lower support levels and barely sustained in their all-time lows. This is normal because altcoin prices mainly depend on Bitcoin’s and Ethereum’s prices. They are the leading cryptocurrencies and most of the trading in exchanges is done with them. Other cryptocurrencies are priced in Ethereum price or Bitcoin price.
Naturally when the leaders prices fall in fiat currency they directly impact other cryptocurrency prices. But it looks like the market is preparing for a big bull run. There are some indicators of a bull phase in its earliest stage. The prices will recover as usual but only time will tell if a big bull run is about to impact the markets. In this price analysis you will see a beautiful inverse head and shoulders graph that signals an uptrend.
Reasons
Lots of negative and panic-inducing news came up that impacted the cryptocurrency markets and the recovery attempts. There was fake news of Binance being hacked that was shared all across the internet and social media. Many investors panic sold which only contributed to the situation. However Binance made an announcement that a large scale attack had taken place, but they had thwarted the hacking and no funds were lost.
All irregular trades were reversed and the hackers even lost coins. Later Binance offered 250,000$ bounty for any information that could lead to the arrests of the hackers. Also the U.S. Securities and Exchange Commission (SEC) has requested all cryptocurrency trading platforms to register as exchanges because they are dealing with digital assets. These regulations are talked about and debated for a long time.
There are interesting opinions from both sides of the debate with positive and negative aspects. Let’s hope that if and when these regulations are imposed, they bring mostly pros to the table and the industry. After all, mainstream adoption is the ultimate goal and if regulations are what is needed then good on them. The last of the biggest news that impacted the market heavily, is the Japanese regulators going hard on 7 exchanges including Coincheck.
Because of the enormous volume of the Japanese exchanges, this factor is impacting the market hard. Many investors in Japan decided to sell everything before heavy taxes hit the Japanese exchanges. There were other reasons too, but these three were the main ones. If you want to be up to par with the news, subscribe to our weekly newsletter bellow the article. With it you can read less and know more. Each week we summarize the most important events in the cryptocurrency world.
The Mt. Gox Bitcoin selling situation
It was reported by several news outlets, that a trustee of Mt. Gox is selling off hundreds of millions of dollars in Bitcoin and around 1.7$ billion worth of Bitcoin is going to hit the markets. Instead of selling them over-the-counter, all Bitcoins will be dumped to the markets. This is causing and will continue to cause problems for Bitcoin’s price in the short term.
“As a result of the consultation with the court, I considered it necessary and reasonable to sell a certain amount of BTC and BCC at this point and secure a certain amount of money for distribution resources, and thus, I sold the amount of BTC and BCC above. I made efforts to sell BTC and BCC at as high a price as possible in lights of the market price of BTC and BCC at the timing of sale. I plan to consult with the court and determine further sale of BTC and BCC.”
Initially 40 000 Bitcoins were sold, which is not a big problem for the market to handle. The following 1.7$ billion in Bitcoin will be an unpleasant resistance in the next few months. As the entire market is following Bitcoin’s price and Ethereum’s price, this volatility tripped the whole market into a downtrend spiral. The way Mt. Gox handled the situation in the past is irresponsible and unprofessional.
They are continuing to do so with this situation. It is unclear if the Mt. Gox trustee will continue to dump Bitcoins on exchanges rather in the Over-the-counter markets where bigger players are in the game. The market manipulation will be avoided if the latter happens.
Cryptocurrency price analysis
Top 10 cryptocurrencies all followed the same price movement and reached familiar lows. As you can see in the graph above Bitcoin and Ethereum are leading with the same graph movement and the other coins are following close. The trading volume of the top 10 didn’t decrease much, with some cryptocurrencies even showing an increased trading volume. The familiar lows that were already reached few times since the beginning of 2018, showed again great support and the bears didn’t break their grip.
The price movement is starting to form an inverse head and shoulders. The head and shoulders (HS) is a reversal pattern that signals that the trend is reversing or has already reversed. There is the top head and shoulders that signal to traders that the uptrend is over and the price could be heading down. The head and shoulders bottom or inverse HS signals to traders that the downtrend could be over and the price will head up. You can see that all of the top ten cryptocurrencies are following an inverse head and shoulders pattern.
This is signaling that the market is preparing to go on an uptrend. The downtrend could soon be over. Afterwards we can expect a bull run that will paint the board with green. Of course the odds of this to happen, is not 100%. This is what technical analysis is showing, but the cryptocurrency markets are far too volatile. You can never be 100% sure of something and should always question the odds. Another possibility is that the inverse head and shoulders pattern will not break up immediately, but could see a small up-and-down action before it does.
The sun will shine brighter. Final thoughts
Interesting fact is that IOTA reached big lows and left the top 10 cryptocurrencies by market cap, currently being 13th. Monero made substantial gains the past week and is back again in the top 10 cryptocurrencies by market capitalization. For a brief period last week, Monero was the only one that was going up in price while there was massive red across the board. NEM is also refusing to follow the leaders and is going up, making substantial gains. Also Binance Coin (BNB) made a 50-60% bull run today, because of interesting news that was released today from Binance.
The Mt. Gox situation in particular highlights the issue of the uneven distribution of coins. A small percent of Bitcoin holders control too many Bitcoins. The problem will persist until more coins are more evenly distributed to smaller players instead of whales buying them all. The dilemma should be addressed in the future, if a situation like the Mt. Gox one can shake up Bitcoin’s progress like this.
Also some people are cashing their Bitcoin because of tax reasons. Recently imposed regulations mean that many investors are currently selling billions of dollars in Bitcoin so they can pay their huge tax bills and avoid facing tax evasion charges. The massive sellling means that a lot of coins are changing their owners. The following month we may see a more diverse trading and healthy rallys.
- Security Token Offering (STO) Guide: Everything you need to know about STOs - Feb 28, 2019
- Coinbase Pro is adding Ripple (XRP) support for trading - Feb 27, 2019
- Top ICOs of 2018: Initial Coin Offerings that beat the Crypto Bear’s market - Feb 26, 2019
- Ethereum hard forks Constantinople and St. Petersburg scheduled by the end of the week - Feb 25, 2019
- Ethereum founder and CEO, Vitalik Buterin revealed his non-Ether holdings and revenue sources - Feb 22, 2019
