Bitcoin, Ethereum, Bitcoin Cash, Ripple, Stellar, Litecoin, Cardano, NEO, EOS: Price Analysis, Feb. 09

Cryptocurrencies are a part of evolving technology and are still in a nascent stage.So, they are likely to remain quite volatile compared to the other matured asset classes.

The early investors in cryptocurrencies were mostly technology enthusiasts who saw a future in them. After the humongous returns of 2017, more and more institutional investors want to join the party.

This is changing the way the cryptocurrencies perform. In the past 90-days, the correlation between the S&P 500 and cryptocurrencies has risen sharply to 33 percent, which is way above the previous high reading of 19 percent, according to Nick Colas, co-founder of DataTrek Research. The long-term average is way lower at 1 percent.

2018 has turned out to be hugely negative to both the stock market and the cryptocurrencies. Let’s see if the top coins point towards a resumption of the downtrend, similar to the S&P 500.

BTC/USD
While it is better to trade with the trend, at times, strong counter-trend rallies can also be profitable. Bitcoin is trading inside a descending channel with both the 20-day EMA and the 50-day EMA trending down. This shows that it is in a confirmed downtrend. The current pullback is likely to face resistance at the downtrend line and the 20-day EMA.

In a downtrend, when the selling is overdone, and prices reach attractive levels, it can offer a short-term trading opportunity.

We believe that if the BTC/USD pair holds above the February 06 lows during the next leg down, the traders will have an opportunity to enter long positions. The ideal time to buy would be when prices break out of the downtrend line and the 20-day EMA. The profit objective of such a trade will be a move towards the resistance line of the descending channel.

However, if the price breaks down and goes on to make a new low, the above-mentioned trading opportunity will be invalidated.