- Bitcoin has again charted a recovery to above $10,000, but the outlook remains bearish with the lower-highs pattern intact.
- The recent gains may be short-lived, as the recovery seen in the last 24 hours is stuck at key resistance levels and lacks volume.
- A UTC close above $11,120 is needed to revive the bullish view. That level could come into play if BTC clears key resistances around $10,200 on high volumes.
Bitcoin is back above $10,000, but the technical charts indicate a bull revival is still $1,000 away.
The premier cryptocurrency by market value is currently trading at $10,150 on Bitstamp, having hit a low of $9,514 yesterday. This is the third time in a month that BTC has charted a quick recovery back into five figures.
Prices bounced off the former-resistance-turned support of $9,097 on July 17 and climbed back above $10,000 the following day. Before that, BTC printed a low of $9,614 on July 2 only to close well above $10,000 the same day.
On both occasions, BTC carved out lower highs – a bearish pattern – at $11,120 and $13,200, respectively.
The latest bounce may have caught some investors off guard, as BTC was on slippery grounds 24-hours ago after breaching long-term trendline support on Tuesday.
Despite the rise, the outlook remains bearish, as the lower-highs pattern is still intact. BTC needs to rally by $1,000 and beat resistance at $11,120 to invalidate lower highs and revive the bullish view.
That said, BTC may have a tough time rising above $11,120 as key resistances are currently capping upside.
Daily and 12-hour charts
BTC is struggling to rise above the resistance of the trendline connecting the July 10 and July 20 highs, currently at $10,200 (blue line above left). The bearish (downward sloping) 5- and 10-day moving averages (MAs) are also lined up near the trendline hurdle.
Also of note, the 5- and 10-day MAs have found acceptance below the 50-day MA – the first bearish crossover since early February.
Continued low trading volumes (above right) further question the sustainability of the recovery seen in the last 24 hours.
Hence, a fall back to $9,600 cannot be ruled out, unless BTC cuts through the descending trendline on the back of high volumes.
In that case, prices could rise toward $11,120, as the 14-day RSI is already reporting a falling wedge breakout (a bullish reversal pattern).
That said, the overall outlook would turn bullish only if prices print a UTC close above $11,120. A breakout above $11,120, if confirmed, would open the doors to $13,800 (June high).
Fundament, a blockchain startup coming out of stealth mode, has received the green light to issue the first tokenized real-estate backed bond that can be widely offered to individual investors.
Announced Tuesday, the Berlin-based firm has obtained approval from Germany’s financial regulator, BaFIN, for the 250 million euro ($280 million) offering. By virtue of being regulated, the token will be open to any retail investor anywhere with no minimum investment restriction.
In other words, someone in, say, Indonesia will be able to buy 100 euros worth of ethereum tokens and thereby indirectly invest in German commercial property.
A BaFin representative told Coindesk:
“We can confirm that we granted approval for a Fundament Group prospectus. It has indeed been the first time we have approved a prospectus regarding blockchain-based real estate bonds, but not the first time in respect to blockchain technology as such.”
The token, which Fundament will start marketing next month, will run on the public ethereum blockchain using the ERC-20 standard popularized by the 2017 initial coin offering (ICO) explosion.
Blockchain real estate is a busy space. Florian Glatz, co-founder of Fundament Group, said typically what has been seen in the past are private placements that have not required a prospectus or a financial market authority’s approval.
In March of this year, for instance, Inveniam Capital Partners tokenized some $260 million in four private real estate and debt transactions, starting with a WeWork-occupied building in downtown Miami, Florida.
Other examples include Templum Markets, which sold a security token representing shares in a Colorado ski resort last year, accepting U.S. dollars, bitcoin and ethereum. Beyond real estate, firms like U.K.-based Nivaura has explored tokenized debt and equity, done in a fully regulated context, allowing for trading on secondary markets.
Glatz told CoinDesk:
“The reason we went through this long tedious process with regulators was to get rid of any restrictions. Normally these projects are limited either by the minimum investment amount, which would be north of €100,000 or limited heavily in the amount of investors you could have. So it’s the first really like mass-market tokenized real estate for the world.”
Fundament’s token will be backed by five separate construction projects, three in Hamburg, one in Frankfurt and one in the university town of Jena. The portfolio, including residential, commercial and hotel properties, would total more than 680,000 square feet upon completion. The company projects a return on the projects in the mid-to high single digits.
“Holding a token enshrines a legal claim of the holder against the issuer of the bond to pay them an annual dividend of around 4-8 percent, and obviously once the run time of the fund is over and there is an exit, then the token holders get the complete value that was within this fund,” Glatz said.
To comply with know-your-customer (KYC) and anti-money-laundering (AML) regulations, IDnow will verify prospective token buyers’ identities. The vendor’s process takes three minutes on average before a user can purchase tokens, Glatz said.
Fundament will not use an investment bank but will distribute the securities itself to lower issuance costs and increase returns for investors, said Robin Matzke, another Fundament co-founder.
Buyers can pay for their tokens with bitcoin, ether, U.S. dollars or euros. For those who pay fiat, Fundament says it will deliver the tokens on a hardware device.
Fitting the project within the strictures of MiFID II – a European regulatory framework that was drafted with other things in mind – was a challenge.
“We handed in the prospectus in December 2018 and got approval last week. So it was 6 or 7 months of work,” said Matzke. “Every two or threee weeks you get 20 pages back from the regulator of things you have to change, and so on, back and forth over a period of months and it ends up being like a book. Ours has close to 100 pages.”
It would have been impossible if the founding team had not comprised so many legal as well as technical experts; in other words, they didn’t have to spend a lot on lawyers’ fees because they are lawyers.
“We saved on that big time,” Matzke said.
- Bitcoin has violated the support of the trendline connecting the April and May lows, having charted a bearish lower high at $11,100 over the weekend.
- A bearish volume divergence indicates prices could fall back to the July 17 low of $9,049.
- Daily chart indicators are also indicating the path of least resistance is to the downside.
- A UTC close above $11,100 is needed to invalidate lower highs setup on the daily chart.
Bitcoin (BTC) fell below key support above $10,000 earlier today and could suffer a deeper drop, according to price and volume analysis.
The top cryptocurrency by market value violated a trendline representing the recent four-month bull run with a move below $11,017 at 06:30 UTC and went on to a hit a low of $9,897 on Bitstamp.
With the pullback from Saturday’s high of $11,140 to sub-$10,000 levels, BTC has established yet another bearish lower high – the most basic of all bearish technical patterns – on the daily chart.
As a result, the bears are expected to dominate proceedings in the short term. In fact, BTC could fall all the way back to the July 17 low of $9,097, erasing the low-volume bounce from that level to $11,120 seen in four days to July 20.
Popular cryptocurrency trader and mentor Chonis Trading took note of the bearish volume divergence on a 12-hour chart on July 21. A bearish volume divergence occurs when trading volumes drop, creating lower highs as opposed to higher lows (an uptick) on the price chart.
A low-volume lift could be referred to as a “dead cat bounce” – a temporary recovery caused by the unwinding of shorts (profit taking).
And the bitcoin market seems to have experienced a dead cat bounce over the last few days.
A sudden unwinding of shorts on July 19, as reported by bot-powered twitter handle @WhaleCalls, pushed prices back above $10,000. The cryptocurrency remained bid over the next two days, only to face rejection above $11,000 over the weekend amid weak trading volumes and fell back below $10,000 earlier today.
While volume analysis favors a drop to recent lows, technical indicators are also painting a short-term bearish picture.
As of writing, BTC is changing hands at $9,970 on Bitstamp, representing a 3.5 percent drop on the day.
Daily and 4-hour charts
The Chaikin money flow index (above left), which incorporates both prices and trading volumes, has dropped below zero for the first time since the end of April. It means BTC is facing sell pressure for the first time in nearly three months.
The 14-day relative strength index is reporting bearish conditions with a below-50 reading. Notably, the indicator failed to rise above 50.00 over the weekend, reinforcing the short-term bearish view.
So, the stage looks set for a drop to recent lows near $9,049. Note that a UTC close below the rising trendline connecting April 1 and May 29 lows would mean an end of the rally from lows near $4,000.
The outlook would turn bullish if prices invalidate the bearish lower-highs pattern on the daily chart with a UTC close above $11,120. That level could come into play if BTC sees a high-volume falling channel breakout on the 4-hour chart (above right).
A stronger confirmation of bull revival would be a weekly close (Sunday, UTC) above $12,000, as discussed earlier this month.
- Bitcoin’s short-term outlook will remain bearish as long as prices remain below $11,080 resistance. A break above that level would invalidate bearish lower-highs setup.
- The bulls may have a tough time forcing a break above $11,080 amid news of BitMEX exchange facing a regulatory probe and talks of harsher crypto regulation.
- Prices could drop below $10,000 in the next 24 hours with daily chart indicators continuing to report bearish bias.
- A weekly close (Sunday, UTC) above $12,000 is needed to revive the bullish view.
Bitcoin (BTC) has rallied sharply in the last 24 hours, but the outlook remains bearish with prices holding below key resistance around $11,080.
The premier cryptocurrency jumped from $9,200 to $10,400 in just 40 minutes during the U.S. session yesterday, contradicting the case for a drop below $9,097 put forward by multiple rejections at $10,000 in the Asian trading hours.
Price rose further to $10,800 at 23:45 UTC, but closed at $10,648, leaving the crucial resistances of $10,759 (monthly opening price) and $10,850 (daily chart resistance) intact, as tweeted by popular analyst Josh Rager.
Rager wants to see BTC climb $10,850 before calling bullish revival. While that argument has merit, a much stronger confirmation of the bullish breakout would be a high volume move above $11,080.
That would invalidate the bearish lower highs pattern created during the sell-off from $13,200 to $9,049, as seen in the chart below.
Bearish lower highs
As of writing, BTC is changing hands at $10,330 on Bitstamp, having clocked highs above $10,770 at 08:00 UTC.
The cryptocurrency has come under pressure in the last hour or so amid news that the U.S. Commodity Futures Trading Commission (CFTC) is probing BitMEX, which offers trading of cryptocurrencies with up to 100-times leverage and products such as futures and swaps, over whether it allowed Americans to use its platform.
The latest CFTC probe could heighten regulation fears that have gripped markets over the last few days, making it difficult for BTC bulls to force a break above $11,070.
Technical charts are also calling a break below $10,000.
4-hour and daily charts
BTC is feeling the pull of gravity, having faced multiple rejections at the 50-candle MA on the 4-hour chart (above left) in the last 18 hours.
With bitcoin’s fall back to $10,300, the bearish crossover of the 50- and 200-candle MAs has gained credence.
Further, the relative strength index (RSI) on the daily chart continues to report bearish conditions with a below-50 print.
The Chaikin money flow index, which takes into account both prices and trading volumes, fell to 0.07 yesterday from 0.08, even though prices rose above $10,000. That divergence (marked by arrow) indicates the buying pressure weakened with the price rise and puts a question mark on the sustainability of the gains seen in the last 24 hours.
The 5- and 10-candle MAs have produced a bearish crossover and prices faced rejection at the descending 5-candle MA earlier today.
Further, the moving average convergence divergence (MACD) has turned bearish for the first time since December 2018, as discussed earlier this week.
All-in-all, BTC risks falling below $10,000 in the next 24 hours. On the downside, strong support is located at $9,097 (May 30 high). A violation there would expose the 100-day MA lined up near $8,100.
On the higher side, a high-volume break above $11,080 would invalidate the bearish setup.
That said, a weekly close (Sunday, UTC) above $12,000 is needed to confirm bull revival due to the fact that BTC has failed to close above that psychological level for three weeks in a row – a sign of buyer exhaustion noted earlier this week.
- Bitcoin closed below $9,614 on Tuesday, confirming a bearish reversal on the daily chart. The invalidation of bullish higher-lows pattern is backed by bearish developments on the short-term charts.
- Prices risk falling to $9,097 (May 30 high) in the next 24 hours. A close below that would expose the 100-day moving average line, currently located near $8,100.
- A key indicator is reporting oversold conditions as per the 4-hour chart, so a minor bounce before any drop below $9,097 cannot be ruled out.
- The long-term outlook will remain bullish as long as BTC is holding above the 200-day moving average line.
Bitcoin logged one of the biggest daily price losses of the year on Tuesday, confirming a short-term bullish-to-bearish trend change in the process.
The world’s biggest cryptocurrency by market value closed (UTC) at $9,412.81 on Bitstamp, down 13.25 percent from the daily opening price of $10,848. That’s the second-largest single-day drop of 2019, the first being the 13.67 percent price slide observed on June 27.
With the drop and the resulting UTC close below the July 2 low of $9,614, BTC has invalidated the most basic of all bullish patterns – the series of higher lows on the daily chart.
Media outlets have associated the recent drop with the growing calls for regulation of Facebook’s Libra project and cryptocurrencies in general.
For instance, Facebook’s plan came under attack at a U.S. hearing on Tuesday, with senators calling the company delusional and untrustworthy and questioning the social media giant on how it was planning to prevent money laundering. And, a week ago, President Donald Trump called for banking regulation on bitcoin and Facebook’s Libra.
Now many in the investor community are beginning to worry that Facebook’s Libra project will end up fast-tracking regulations for the crypto market.
The shift in sentiment will likely have a bearing on bitcoin’s price. After all, the crypto market leader rallied from $9,000 to $13,880 in the eight days following Facebook’s unveiling of Libra’s white paper on June 18.
With the odds now stacked in favor of bitcoin’s bears, the cryptocurrency could suffer a deeper drop in the short-run.
As of writing, BTC is changing hands at $9,400 on Bitstamp.
Bitcoin’s invalidation of bullish higher-lows pattern, as represented by Tuesday’s UTC close below $9,615, is backed by a below-50 (bearish) reading on the 14-day relative strength index (RSI) and the downward sloping 5- and 10-day moving averages (MAs).
Further, prices are trading below the key support of the 50-day MA for the first time since early February.
The Chaikin money flow, which takes into account both prices and trading volumes, is barely holding in positive territory, a sign that buying pressure has weakened significantly over the last three weeks.
So, the stage looks set for a drop to $9,097 (May 30 high). A violation there would expose the 100-day MA, currently at $8,122.
A weekly close above $12,000 is needed to invalidate the bearish setup, as discussed yesterday.
The RSI on the 4-hour chart is reporting oversold conditions. As a result, BTC may chart a bearish lower high around $10,000 before falling to $9,097 or below.
While short-duration charts are calling a deeper drop, the long-term outlook will remain bullish as long as prices are held above the 200-day MA, currently lined up at $5,983.
It’s worth noting that prominent analysts believe the ongoing price drop is nothing but a correction in a bull market.
“We’ll retrace inside a temporary downtrend”, @pierre_crypt0 tweeted yesterday.
Alex Kruger, a renowned technical and fundamental analyst, also feels the price is drop is a healthy correction.