Weekly Market Analysis of Cryptocurrencies
We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on June 26.
After testing the $9,000 support, bitcoin price started an upside correction. BTC recovered above 9,200, but it struggling to gain traction above 9,300. The current price action suggests that the price could continue to move down below 9,100 and 9,000.
To start a steady recovery wave and a nice upward move, the price is likely to rise towards the 9,500 and 9,550 resistance levels.
Ethereum price found support near the $225 level and recently recovered above $230. However, ETH is facing a strong resistance near 235.
On the upside: if there is a clear break above 235, the price might recover towards 250.
On the downside: the 228 and 225 support levels hold the key. A clear break below 225 could open the doors for a sharp decline towards 205.
Bitcoin cash price is currently consolidating near the $230 level and it remains at a risk of more losses towards $225 and $220. On the upside: 235 is initial resistance. The main resistance is near 240, above which the price might rise towards the 250 resistance level.
Litecoin broke the main $42.0 support level to move into a bearish zone. LTC is now at risk of a bearish break below the 40.0 support level.
If there is a daily close below 40.0, the bears are likely to aim a test of the 36.5 support. Conversely, the price is likely to struggle to recover above the 43.2 resistance.
XRP price is now trading well below the $0.182 pivot level and it seems like there are chances of a push towards 0.175. The next major support is near 0.168. On the upside, the bulls are likely to face a strong selling interest near 0.182 and 0.185.
In the past three sessions, many small altcoins declined over -5.0%, including FXC, SEELE, CHSB, LEND, DCR, ZIL, WAXP, KMD and BNT. Conversely, LRC, COMP, CEL and ETN are up more than +5.0%.
How to Apply Forex Scalping Strategies to Crypto Trading
Alex Lielacher (Cryptonews.com) gives some hints about how to apply scalping strategies to crypto trading.
“In currency trading, scalping (also known as scalp trading) refers to when a trader makes a large number of small transactions to profit off small price movements throughout the day. By generating dozens (or even hundreds) of short-term trades a day, successful scalp traders can generate sizable daily trading profits. And they can do this despite the fact that they are essentially engaging in a relatively low-risk trading strategy in a volatile market.
To execute this type of strategy, traders usually deploy a system that provides them with trading signals – often based on technical indicators – that they use to make buying and selling decisions. Because machines can execute technical indicator-based trades faster than humans, most experienced forex traders use trading bots to help them execute their scalp trading strategy effectively.
Additionally, traders use leverage to amplify their potential trading profits, to allow them to put only a small amount of capital into each trade they make.
Risk management is another important factor for scalp traders. To execute this type of trading strategy, traders put tight stop-loss limits and price targets in place to ensure that no trade ends up losing too much money. Seasoned traders will use trading software that executes stop-loss limits and price targets automatically – effectively taking emotion out of the equation.
Due to the similarities between traditional fiat markets and the cryptocurrency market, there is already a large number of crypto traders out there who use scalping strategies. And crypto trading bots have become so advanced that the same sort of theories can easily be applied by bitcoin traders.
However, the reason why scalp trading is so popular in the forex market comes down to the fact that it is a multi-trillion dollar market with ample liquidity in its largest trading pairs.
The crypto markets, on the other hand, only have a daily exchange trading volume of around $100 billion, and a big chunk of that is taken up by bitcoin.
That means – aside from BTC/USD and BTC/TUSD (TrueUSD) pairings – there aren’t many crypto trading pairs available that let you successfully execute an automated scalp trading strategy using leverage.
A trader could start by following these steps: decide on the trading pairs to scalp; sign up to a trading platform that provides high liquidity in chosen trading pairs; get a trading bot that allows to execute a wide range of technical indicator-based trading strategies; develop and backtest scalping strategies; live-test the trading strategies and make sure all risk management measures work in the live markets; start scalping.
There are plenty of advantages and disadvantages involved with crypto scalping.
Pros: it is a relatively low-risk trading strategy that can be automatically executed using trading bots;once a trader has found the right indicators and bot settings for you, he/she can generate regular trading profits without really needing to get involved on a micro level.
Cons: without trading software, it is difficult to successfully execute this strategy. Finding the right indicators can involve conducting a substantial amount of backtesting, which can be time-consuming. Although scalping is usually considered to be a relatively low-risk trading strategy, you can still lose your trading capital. Trading fees do tend to add up and could eat into your profits.”
EU Creating a Regulatory Regime for Cryptocurrencies, EU Dombrovskis Says
Paddy Baker (Coindesk.com) writes that the European Union is preparing a new cryptocurrency regime that could include stricter requirements for “global stablecoin” projects such as Libra.
“The bloc’s lead economics minister, Valdis Dombrovskis said Europe had to seize the opportunity to become one of the main rule-makers for digital finance.
“This is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance,” he said during a speech at the Digital Finance Outreach 2020 earlier this week.
And the first test case, Dombrovskis said, would be cryptocurrencies. Although some cryptos, such as security tokens, are pretty well covered by European law, whole bundles of them, most notably stablecoins, remain entirely unregulated.
“Lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU,” Dombrovskis said.
Some EU members have taken matters into their own hands, which damages market integration and makes it difficult for companies to operate across the whole trading bloc.
A new regulatory regime for cryptocurrency will not only cover unregulated digital assets, but it will also consolidate and homogenize existing standards across the continent, Dombrovskis said.
Set to be unveiled later this year, Dombrovskis, who was formerly the prime minister of Latvia, didn’t give much away on what the future regime might look like, although he emphasized that it would support and stimulate innovation.
A pilot scheme would allow regulators to provide a space for new experimental solutions to be monitored and observed, he said.
While Dombrovskis’ speech contained few specifics, he did say that the EU was particularly keen to bring stricter rules on any project deemed to be a “global stablecoin.”
What exactly Dombrovskis means by “global stablecoin” isn’t immediately clear. However, it appears one of the key components is that it’s used instead of traditional fiat currencies and can facilitate a greater number of transactions that cross national borders.
That might be an inference to initiatives such as Facebooks’ Libra. Stablecoins, possibly like Libra, that operate on a global scale can “raise additional challenges,” Dombrovskis said – they can disrupt financial and monetary stability.
“Overall, our approach will be proportionate and relate to the level of risk. That means lighter rules for less risky projects,” Dombrovskis concluded. In the case of global stablecoins, such as Libra, “their potentially systemic role [means] our rules will be stronger.”