crypto market analysis

Hi Crypto Network,

China is expected to start testing its central bank digital currency (CBDC) in real-world applications as soon as this month, according to local news outlet Caijing. The pilot project will be spearheaded by the Chinese central bank and will include four major banks and economic participants such as China Telecom.

 

The CBDC will be put to test in “real service scenarios such as transportation, education, and medical treatment, reaching end users and generating frequent applications,” said the article.

A recent research by Deutsche Bank strategist Jim Reid has projected that digital currencies could replace cash by 2030. However, before cryptocurrencies gain wider acceptance, they will have to cross a few hurdles. The first being acceptance by the regulators and governments and the second is price stability. Along with these, the cryptocurrencies will have to reach a wider audience by tying up with mobile apps and card providers. We believe that the acknowledgement of the rise of cryptocurrencies by a traditional financial institution is a huge positive.

The rise of Bitcoin futures volume on various exchanges is a positive sign as it shows that institutional players are active at these levels. The crypto exchanges continue to expand their services to cater to the large players. Bakkt launched regulated Bitcoin options trading on December 9 and Malta-based exchange OKEx has said that it will launch options trading on December 27.

Most major cryptocurrencies have entered a tight range-bound action. This is unlikely to continue for long as we anticipate a large move within the next few days. What are the critical levels to watch out for that will signal the start of a new uptrend? Let’s analyse the charts.

BTC/USD

The bulls are facing stiff resistance at the 20-day EMA. This shows a lack of demand at higher levels. The failure to push the price above the 20-day EMA will attract sellers. We now expect the bears to try and break below the immediate support at $7,080. If successful, a retest of the recent lows at $6,526 is possible.

On the other hand, if Bitcoin bounces off $7,080 or turns around from the current levels and breaks out of the 20-day EMA, it is likely to attract buyers. The cryptocurrency will gain strength after it breaks out and sustains above $7,870.10.

Above this level, a rally to the resistance line is likely. We expect the bears to aggressively defend this level but if the bulls can breakout of the resistance line, a new uptrend is probable. Therefore, the traders can buy on a breakout and close (UTC time) above the resistance line with the stops placed just below the recent low. The first target is a move to $10,000 and above it $12,000.

 

ETH/USD

The bulls are struggling to push the price above the 20-day EMA. This is a negative sign as it shows that buying dries up at higher levels. Both the moving averages are sloping down and the RSI is in the negative zone, which shows that bears are in command. A break below the immediate support at $140 will result in a retest of the recent lows at $131.80.

However, if the bulls defend the support at $140 or if Ether turns around from the current levels and breaks out of the 20-day EMA, it will be the first indication that bulls are back in the game.

We anticipate a stiff resistance in the $157.73 to $163.57 zone. If bulls can propel the price above $163.57, we expect a move to $200. We will wait for a new buy setup to form before proposing a trade in it.

XRP/USD

XRP has been range-bound between $0.21262 and $0.2365 for the past few days. This shows a balance between both bulls and bears. Longer the range, stronger will be the eventual breakout or breakdown from it.

A breakout of $0.2365 will indicate that the bulls have overpowered the bears. Above this level, we anticipate the price to gradually move up to $0.31533. As the risk to reward ratio is attractive, the traders can buy on a close (UTC time) above $0.2365 and keep a stop loss of $0.21.

Conversely, if the price breaks down of $0.21262, it will indicate a victory for the bears. Below this level, a retest of the recent low at $0.20256 will be on the cards.

 

BCH/USD

Bitcoin Cash has again slipped back to the critical support at $201.66. Repeated retest of a support level weakens it. The downsloping 20-day EMA and the RSI in the negative zone indicate that bears are in command.

If the bears sink the price below $201.66, a retest of $192.10 will be on the cards. If this level also fails to offer support, the downtrend will resume. The next support on the downside is way lower at $166.98.

Our bearish view will be invalidated if the price bounces off $201.66 and rises above $227.04. Such a move is likely to attract buyers who can push the price to the 50-day SMA and above it to $300. We will wait for the price to sustain above $227.04 before recommending a trade in it.

 

LTC/USD

Litecoin looks weak as it has been consistently trading below the previous support turned resistance at $47.22. This shows a lack of buyers at these levels because they are not confident that a bottom is in place yet.

The bears will now try to sink the price below the recent low of $42.16. If successful, the downtrend can extend to the next support at $32.

Our bearish view will be invalidated if the price turns around from the current levels or from $42.16 and rises above the $50.25 to $47.22 resistance zone. Above the zone, we anticipate a move to $66.19. Therefore, we shall suggest a long position after the price sustains above $50.25.

 

Hopefully, you have enjoyed today’s article. Thanks for reading!

Have a fantastic day!

Live from the Platinum Crypto Trading Floor.

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