The Daily Cryptomenon
6th August 2020
Your daily Cryptocurrency Market Analysis News brought to you by the CryptoAltum Cryptomenon Team.
This analysis was written at 9:00 am GMT +3, on 06.08.2020
The cryptocurrency market wakes up today to the visual of a new all-time high for Gold. We know that it has nothing to do with cryptocurrencies, but in this instance it does. After the yellow metal broke through the $2,000 barrier, it has emboldened our cryptos to rally as well, giving bulls that needed push to break out of the consolidation that we talked about in yesterday’s article. With that said, let’s find out what today holds for cryptocurrencies on August 6th, 2020.
Cryptocurrency Recap
Our cryptocurrency trio - Bitcoin, Ethereum, and Ripple, did seem to have some reserve fuel to continue the trek higher, but was it really a move due to reserve momentum that the Bulls had, or was it because of the move in Gold? We’ll leave the answer up to you and whether or not we might be seeing a new correlation with the yellow metal and cryptocurrencies.
Bitcoin (check out the chart below you’ll find that Bitcoin is the purple line) broke through the consolidation to move higher printing a performance of 28.32% on a month-to-month basis*. Ethereum (red line), moved higher as well following in the steps of BTC with a performance of 73.67% on a month-to-month basis. Ripple (orange line) did move higher alongside its cousins, but seems to have failed to maintain the higher performance as it prints 69.04% on a month-to-month basis.
*Please note that we mention month/on/month we mean the same day, one month ago. For example, 29th of July till the 29th of August.
What’s the strategy you’re going to use when it comes to these cryptos? Do you believe that the Bulls are about to finally break above their targets? Or do you believe the Bears will defend those targets with everything they’ve got? Whatever you choose to believe, you can react to it all on CryptoAltum.
Bitcoin Mirrors Gold and Moves Higher
The cryptocurrency king is facing increased resistance pressure as it continues its move higher towards $12,000. That move coincided with the move in Gold, where the yellow metal broke through the $2,000 level for the first time in history. It would seem that old investors are targeting Gold while new investors are targeting Bitcoin. Could there be a change in dynamics? That’s a topic for another piece.
As things stand, BTC is trading just above the current support (albeit a minor one) at $11,500. However, it seems to be facing strong resistance at the $11,800 before attempting to break through $12,000. This tells us that sellers and Bears are willing to protect that level with everything they have, and for the bullish movement to continue, a break above $12,000, else we could be seeing consolidation reign supreme for the time being.
Looking at the RSI (Relative Strength Index) we can see that the indicator has managed to end the consolidation at the 50 level. This means that the chances of a consolidation happening are slim, however, should the indicator continue with the same sideways move around the 60 level, we might be seeing increased bullish pressure as the Bulls remain in control, enough to break through the targets at $11,800 and $12,000.
Ethereum’s Bane at $400
Ethereum has spent most of the time this week trying to take down the resistance at $400. There have been instances where the crypto has made it above this seller congestion zone, however, buyers never managed to sustain gains above $415. The most recent spike traded a weekly high at $408 before giving way for the sellers to start wreaking havoc.
Ether is trading at $395 at the time of writing, with sellers being the more dominant force in this market. This gives the impression that gains above $400 are unlikely in the current session, and possibly in later sessions as well. For now, the path of least resistance is downwards, especially with the technical indicators sending out negative signals. If losses make it past $380 expect the price to free-fall to $360 and $340.
As things stand, the RSI (Relative Strength Index) is showing a slight dip below the 60 level, however, we aren’t quite sure whether or not this is the beginning of a move lower or just a blip on an overall consolidatory pattern with an upward bias. Should the indicator face increased selling pressure, enough to break below the 50 level, then the bullish momentum might have reached an end and the beginning of a reversal with Bears in charge.
Ripple Stays Below $0.3000
Ripple hit a monthly high at $0.3278 during the weekend session. The magnificent rally was then followed by a reversal that tested $0.24. Since then, effort and attention have been channeled towards not only bringing down the resistance at $0.30 but also sustain gains towards $0.40 and $0.55.
As things stand, Ripple is trading at $0.2980. The immediate upside is limited by the tough to crack resistance at $0.3000, with more sellers poised to enter the market should the digital asset manage to break above said level.
Furthermore, the way the price action has been, well, actioning, it would seem that the movement over the past week or so has created a wedge pattern, which is usually a continuation pattern, meaning that we can expect that the previous move higher is going to continue. However, with XRP right at the lower bound of the wedge, the chances for continuing higher are still slim, especially when coupled with RSI (Relative Strength Index).
The RSI is showing more downward movement as it prints lower highs and lower lows, while the price action caught in the wedge is showcasing lower highs and higher lows. It would seem that this divergence is bound to correct itself and according to us, the more probable move is to the downside as the $0.3000 is proving too hard to handle for Ripple.
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