The trade volume of retail investors has been dropping and there is still a lack of participation from traditional investors like investment banks.
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The market data is provided by the HitBTC exchange.
November has seen the overall trade volume of retail-focused crypto exchanges drop, while the trade volume of exchanges preferred by larger players has increased instead. After an extended decline, when retail activity drops and institutional activity picks up, a market bottom usually approaches.
However, there is still a lack of participation from traditional investors such as investment banks, pension funds and asset managers. These investors are fairly conservative due to regulatory issues, and are likely to gradually enter the space after the groundwork regarding compliance with regulations and custody solutions has been completed.
In the cryptocurrency market, more than 50 percent of transactions are done through over-the-counter (OTC) trading, and the competition to attract institutional investors is heating up. Coinbase, Poloniex and MV Index Solutions are some of the latest entrants into the lucrative OTC space.
Chart data supports our view that a bottom in crypto markets is near. However, it is difficult to pinpoint the lowest price range. Therefore, investors and traders should start building positions on dips to the $3,000–$3,500 area.
BTC/USD
Bitcoin is attempting to stage a recovery from the Dec. 7 low of $3,329.05. Currently, the pullback is facing resistance at $3,387.33. The bulls haven’t even managed to reach the 20-day EMA after breaking down of the $5,900 line in mid-November. This shows that the sellers are in a hurry to establish short positions on every small pullback.
Both moving averages are sloping down, and the RSI is near the oversold levels, confirming a strong downtrend. The only silver lining is that a positive divergence is developing on the RSI.
After a two-day pullback, the bears might attempt to resume the downtrend. A break down of $3,329.05 can result in a fall to $3,000, which is an important support. Below this level, the next support is at $2,416.52.
However, we believe that the $3,000–$3,500 zone will offer a strong support. If the $3,329.05 level holds, the BTC/USD pair can rise to the 20-day EMA, close to $4,100.
The next fall — if the price holds above $3,329.05 — can be a buying opportunity. We recommend going long with 50 percent of the usual position size in the $3,000–$3,500 zone. We shall suggest increasing the position after the pair moves in our favor.
XRP/USD
Ripple held the support line of the descending channel on Dec. 7. However, the ensuing bounce could not scale the immediate overhead resistance of $0.33108.
The bears will try to sink the XRP/USD pair below the channel. If successful, a retest of $0.24508 will be on the cards. The moving averages are falling and the RSI continues to trade close to the oversold zone. This shows that the sellers have an upper hand.
If the bulls defend the zone between $0.24508 and the support line of the channel, the virtual currency might enter into a consolidation. Traders should wait for the trend to change before adding to their existing positions.
ETH/USD
Ethereum continues to be in a strong downtrend. For the past three days, the bulls have failed to sustain above $100, which is close to the previous support-turned-resistance of $102.2. This suggests a lack of buying by the market participants.
If the ETH/USD pair breaks down of Dec. 7 low of $83, the downtrend will resume. The next stop on the downside is way lower at $66.
On the other hand — if the bulls defend the support — the virtual currency might consolidate for a few days, before starting a new uptrend. Traders should wait for the confirmation of a bottom formation before attempting to buy the coin.
XLM/USD
The pullback in Stellar could not scale the overhead resistance of $0.13427050. The failure of the bulls to rise above the first resistance shows that the supply is outstripping demand.
If the bears succeed in breaking down of a Dec. 7 low of $0.10488320, the fall can extend to the next support at $0.08. The downward moving averages and the RSI in the oversold zone show that the path of least resistance is to the downside.
Contrary to our opinion, if the bulls defend the Dec. 7 low, the XLM/USD pair might consolidate between $0.10488320 and $0.13427050 for a few days. There are no bullish setups yet, hence, we are not proposing any trades in it.
BCH/USD
Bitcoin Cash is unable to find buying support at higher levels. Though the fall in the past few weeks has been sharp, the pullbacks have been weak and short-lived.
After trading inside a range for the past three days, the bears are attempting to break down of the support at $94 and resume the downtrend. There is a strong support at $91.78. If the BCH/USD pair stages a recovery from the support zone, a pullback to the 20-day EMA is probable.
We suggest traders wait for the decline to stall and a buy setup to form before turning positive. As there are no bullish setups, we suggest traders remain on the sidelines for a few more days.
BSV/USD
Bitcoin SV has been an outperformer among the top cryptocurrencies in terms of market capitalization. It has been trading inside the range of $80.352–$123.98 since Nov. 26.
Trading inside the range is likely to remain volatile, without any clear sense of direction. The next decisive move in the BSV/USD pair will happen either on a breakout or on a breakdown from the range.
A breakout will confirm that the buyers have overpowered the sellers and a rally to the pattern target of $167.608 is possible. On the other hand, a breakdown can result in a retest of the bottom. We suggest traders either buy above the range, or if the overall sentiment improves, a trade can be attempted closer to the bottom of the range at $80.
EOS/USD
After a prolonged downtrend, EOS found some buying at the $1.55 level. It has pulled back to the downtrend line, which is acting as a resistance.
In a strong downtrend, the pullback usually lasts from one to three days. If the EOS/USD pair turns down from the current levels, it can retest the support on the downside at $1.5257–$1.55. If this support breaks, the downtrend will resume.
On the upside, a break out of the downtrend line can result in a relief rally that can extend to the 20-day EMA, which will act as a stiff resistance. The short-term traders can stay on the long side of the trade if the price sustains above the downtrend line. Swing traders, however, should wait for the trend to change before initiating long positions.
LTC/USD
Litecoin has been facing resistance at just below the $28 level for the past three days. A break out of $28 can result in a pullback to the 20-day EMA at $32.
If the LTC/USD pair fails to scale $28, a retest of a Dec. 7 low of $23.1 is probable. A break down of this can extend the downtrend to the next support at $20.
The moving averages are sloping down, and the RSI is in the oversold zone. This confirms that the trend is still down. Though it is forming a positive divergence, traders should wait for the price to follow through to the upside, before buying it.
TRX/USD
TRON continues to face resistance at the 20-day EMA, which is showing signs of flattening out. The RSI has also been trading close to the 40 levels since Nov. 29. This points to a likely consolidation in the next few days.
We continue to like the TRX/USD pair because it has not fallen to a new year-to-date low since Nov. 25. A breakout above the overhead resistance of $0.0183 will signal a likely bottom.
Conversely, if the virtual currency turns down from the current levels and breaks down of $0.01089965, it can fall to the next support of $0.00844479. We are waiting for a bullish pattern to develop before suggesting a trade in it.
ADA/USD
Cardano has been facing resistance at the breakdown level for the past three days. If the bulls succeed in sustaining above $0.035, a pullback to the 20-day EMA is probable.
Though the RSI is still in the oversold zone, it is showing signs of a positive divergence. However, traders should wait for the price to bottom out before buying it.
If the bears defend the overhead resistance or the 20-day EMA, the ADA/USD pair might remain in a range for a few days. On the downside, a break below the Dec. 7 low can result in a fall to $0.025954.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.
