BY Fintan Ng - November 16, 2018
Further consolidation needed in market before re-entry
With the fall in bitcoin’s price to below the year’s low, analysts are now cautioning against an entry until prices consolidate further.
According to CoinMarketCap data, aggregate bitcoin prices fell to as low as US$5,358.38 on Nov 15 before closing at US$5,648.03, lower than the previous day’s close of US$5,738.35. Prior to the last two days, the previous low was US$5,826.41 on June 24.
According to analysts, market sentiment was hit when bitcoin fell below the psychological US$6,000 levels, which spurred panic selling.
While prices are higher in early morning Asia trade, the lower close in the last two days mean that many will continue to stay on the sidelines.
One analyst says the daily relative strength index, which is an indicator of either oversold or overbought conditions, has “never been this low for the US dollar/bitcoin pair”.
He considers this as a capitulation, estimating that US$25bil or something like 10% of bitcoin’s market capitalisation was wiped out over a 24-hour period.
He warned investors to be cautious, that market sentiment is fragile and sees further price declines to below US$5,000 levels for bitcoin.
“Do not invest in altcoins for now, as price declines in percentage terms will be lower,” he says. For him, prices will not “normalise” for the foreseeable future.
Another analyst believes that the US$5,400 levels could be a potential turning point for the market but is cautious.
“It is preferable for prices to consolidate at these levels before considering a re-entry,” he says.
While a bitcoin bull, he is cautious in describing recent price action as the last legs of a bear market.
But he is now looking towards the US$4,800 to US$5,000 range as an entry point, both as an indicator for accumulation of altcoins and the spot US dollar/bitcoin trades.
At press time, bitcoin declined 1.69% to US$5,628.19 over a 24-hour period while ethereum, which has dropped to third placing in terms of market capitalisation, was down 1.10% to US$179.73.
XRP gained 2.72% to 47.90 US cents and has taken over ethereum’s place in terms of market capitalisation.
Bloomberg reported on Nov 15 that shares of companies with crypto-related businesses fell, with Tokyo-based Monex Group, owner of the Coincheck exchange and SBI, which owns the VCTRADE exchange, falling over 2% to trade in two-week lows while South Korea’s Vidente and Omnitel, which have stakes in Bithumb, retreated at least 6% to lead declines among crypto-linked stocks.