Last week we wrote Cryptocurrencies: a Sea Of Red or a World of Opportunities in which we argued that the wave of crypto selling was likely more of an opportunity rather than a threat. This week, we see a potential confirmation of this thought. However, a bit more time is needed to confirm … this is why.
We are focused on the top 8 cryptocurrencies. When combined it makes up for an index, and it nicely represents the leading cryptocurrencies. Needless to say the chart of this top 8 index is telling for the crypto sector.
We have explained countless times that cryptocurrencies respect trendlines on their chart(s) almost unanimously. It is amazing how these ultra-volatile assets are in synch with chart patterns and trends.
No matter how media try to link price moves with news we cannot believe there is a direct correlation. It simply is buying and selling in nicely formed patterns that is leading, not the news.
Although some argue that the CFTC and SEC yesterday were more positive than expected on cryptocurrencies, and that it lead to a rebound of prices, we still believe that exhaustion selling is a better ‘reason’.
The Senate Banking Committee heard testimony from the chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, and the chairman of the Securities and Exchange Commission (SEC), Jay Clayton, on the potential dangers of digital currencies as investments. Their testimony, amid a crackdown on Bitcoin (BTC) exchanges in China and South Korea, wasn’t as negative as many cyrptocurrency investors had feared.
Be that as it may the fact of the matter is that the crypto top 8 index is still in its long term rising chart pattern. Moreover, after a blip yesterday that blipped right below the channel, we are back in the channel today. The point is that as long as prices move in the rising channel there is no reason whatsoever to panic or sell, on the contrary.
Once prices fall below the rising channel it is time to zoom out, and identify what is happening on a larger timeframe.
