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Crypto Downturn Market Analysis and Blockchain Industry Shake-Ups

Crypto Downturn Market Analysis and Blockchain Industry Shake-Ups
By Decentrl.Agency • Issue #4 • View online

Market Watch
What a stunning two weeks of price action.
Let’s take a look at what all happened and what we can look forward to next. If this wall of text is daunting, a short and sweet version is provided below.
1) We saw the absolute tearing apart of Bitcoin Cash. The two rival factions BCH ABC and BCH SV, led by Roger Ver and Craig Wright respectively, carried out their contentious hard fork and began a hash and social media war with each other. The price of both forks combined fell dramatically from prices of the previous weeks.
2) Bitcoin finally broke from the eternal $6000 - 6800 range. The sell off was a violent drop to $5500, where buyers did not step in. Since then, Bitcoin has been in a low volume free-fall spurred by spot selling (not margin shorts). The first major supports we targeted, $5400 & $4800-5000 both saw weak bounces, followed by continued selling. As of the writing of this update, we are now gradually beginning to see volume (and therefore buying interest) come in in the low $4000s.
3) Altcoins in general took a nosedive with Bitcoin, with a couple notable exceptions. Both large Marketcap alts XRP & XLM maintained their respective USD values during much of the sell off, leading their bitcoin ratio trading pairs to skyrocket. XRP / BTC saw a 33% rally from it’s value before the $6,000 Bitcoin break, providing a lucrative trading opportunity for those trading this pair with leverage. For the Ripple holder, it seemed all but sure that this crypto sell off would have no effect on them. This phenomenon broke as Bitcoin feel deeper into the mid $4000s.
Looking at a bird’s eye view of Bitcoin, we can start to build an idea of where we’re going next by identifying overhead resistance and underlying support. Looking to the right of the chart, the volume profile indicator shows us the volume of buying and selling historically seen at a price point. This volume gives us a hint as to what price levels are likely to be defended, by both bears and bulls alike.
Bitcoin is currently bouncing from the strong support seen in the low $4000s. The volume here has increased dramatically in the last two daily candles, but we are still far from the capitulation volume seen on the drop to $6,000 in February. This is a higher time frame clue that the sell off and downtrend still has further to go.
We can reasonably expect the low $4000s to continue to act as a strong support in the immediate, and it is quite possible we begin to develop a range between $4,000 and $6,000. $5850 and $5500 both appear as strong resistance levels to overcome. Not pictured in the bird’s eye view, but looking closely $5200 appears as a higher volume node where we can begin to expect resistance. Overall there is very little price action in the upper $4000s and a bounce / shortsqueeze could relatively easily work it’s way to the low $5000s.
If the low $4,000s are breached we look down to $3,000 and the the high $2000s as the next major support. It can’t be said that this will happen for sure, but it is certainly a possibility to consider.
If you want the short and sweet:
- Moderate chance Bitcoin ranges between $4,000 and $6,000 for a period. A break above $6,000 would prove to be very bullish. However given current price action, break through even $5,200 is optimistic.
- Moderate chance Bitcoin breaks below $4,000 and from there we target $3,000 and the upper $2,000s.
While this bearish news isn’t exactly encouraging, negative emotions associated with a downturn are a natural part of market cycles. A falling price in the short-term does not detract from Bitcoin’s value proposition, nor does it detract from Bitcoin’s future. While things may look quite dark before the end of this particular cycle, it will come to an end as a bull market begins anew.
News
KPMG released a detailed report on its take on the state of cryptoassets, as well as their potential. Expressing a mostly positive view of the new asset class, they described cryptoassets as “impossible to ignore,” before also highlighting that many currently “…do not even have a functional product associated with them.” After detailing the areas in which the industry needs to mature and outlining a path to institutionalization, they ended on “A new world of finance is emerging in which transacting in cryptoassets may become standard procedure.”
The U.S. Securities and Exchange Commission (SEC) recently entered cease and desist orders for two ICO companies, Paragon and CarrierEQ Inc. (aka Airfox). The companies, having raised approximately $12m and $15m respectively, have “…agreed to return funds to harmed investors, register the tokens as securities, file periodic reports with the Commission, and pay penalties [of $250,000 each].” Many agree that this move by the SEC is a signal for more to come, with U.S. enforcement standards becoming more clear as a result.
Blockchain-behemoth ConsenSys isn’t immune to the bear market. The ills of the market slump include the exit of Token Foundry’s CEO, as well as the company (ConsenSys) recently bailing out a journalism-based ICO (Civil) they facilitated after it only raised $1.4m of its minimum $8m goal. ConsenSys promised $2.5 million in capital and $2.5 million in services to make up for the low raise.
The third largest crypto exchange, Huobi, has just formed a Communist Party committee (an office with the goal of actualizing party ideals within the company). While private companies having at least three party members can start their own party office, this is the first known blockchain based company to create one.
In the fog of the Bitcoin Cash war, Hong-Kong based cryptocurrency exchange OKEx suddenly changed its terms on $135m worth of derivative contracts, forcing settlement unannounced and unexpectedly during a time of high volatility. Many traders interviewed by Bloomberg were untrustworthy of the exchange after the incident, one claiming to have lost $700k as a result. OKEx claimed “an early announcement may make room for market manipulation and cause loss to our users,” and that this wouldn’t normally happen “except for extremely special cases like the BCH hard fork.”
An exposé on the “opaque” crypto-giant BitMEX, authored by the anonymous user “Hasu”, has made their CEO Arthur Hayes respond via an interview with Yahoo Finance. The allegation that Hayes fought hardest against was that BitMEX’s trading desk has an unfair advantage, an allegation Hayes has denied more than once.
New York Stock Exchange’s parent company ICE has rescheduled the launch of its cryptocurrency service platform regulated Bitcoin futures market BAKKT from Dec 12th to Jan 24.
The expensive Bitcoin Cash war rages on. The Bitcoin “Core” versus Bitcoin Cash battle for the title of the true Bitcoin takes a pause as Bitcoin Cash Satoshi’s Vision and Bitcoin Cash ABC, led by Craig Wright and Roger Ver respectively, compete for the title of Bitcoin Cash.


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