The new year has started shaky for cryptocurrencies as a whole. As the digital currencies rise in popularity, so is the volatility. A 30% to 50% movement per week has become the norm, even in top-rated coins. However, along with the volatility comes the opportunity to make extraordinary returns in a short span of time. Staying up-to-date ensures success while investing in financial markets. That rule applies to cryptocurrencies as well. Let us see the recent developments in the cryptocurrency market.
Bitcoin
Bitcoin started off very well this week at $14,000 levels but was unable to sustain and move up due to an increase in the selling pressure. The South Korean cryptocurrency exchanges generate a majority of trading volume in several well-known cryptocurrencies such as Bitcoin and Ripple. Therefore, any negative news that comes out of South Korea affects all the cryptocurrencies.
Yesterday, a South Korean minister has warned that the country may soon issue a blanket ban on cryptocurrency trading, as early as next week. That triggered a panic sell-off in the market, leading to a sharp fall in the price of Bitcoin. It can be remembered that the Chinese government has recently ordered the miners to make an orderly exit. The cryptocurrency briefly touched 9,952 before recovering back to 10,500 levels. Read more here.
Ethereum
Last Friday, Ether recorded a historic high of $1415. However, the report of a possible ban on cryptocurrency trading in South Korea pushed Ether to a low of about $880 yesterday. There are blockchain platforms that claim to offer better features and security than Ethereum. Still, Ethereum continues to lead blockchain adoption among businesses. Therefore, any dips in Ethereum should be construed as an opportunity to invest.
Ripple
No other top-rated cryptocurrency would have seen a roller coaster ride of this magnitude in a short span of time. The crypto coin climbed from $0.20 to $3 and has fallen back to $1.10 levels in a matter of one month. The market capitalization is down to $48 billion, less than half of what it was a few days before. There are two reasons for the decline.
The market has quickly realized that not even a single bank has completely adopted the platform so far. The platform is only in the stages of testing. Secondly, Ripple is now facing a case in the New York state court regarding a contract signed in 2016, with the R3 consortium. The value of the option contract is now $12 billion. The judgment may decide the fate of the company and the Ripple platform. Therefore, the market is punishing Ripple, considering the seriousness of the issue. Read more here.
Our Forex Trading Plan
Bitcoin. In our previous articles, we had mentioned that Bitcoin is moving within a range of 13,000 and 17,000. Yesterday, the news of a probable trading ban by South Korea resulted in a breakdown of the lower range of the trading band. We are now expecting Bitcoin to remain on a weak note for a considerable period of time.
Technically, the stochastic indicator has also entered the bearish zone. Until the oscillator climbs back above the reading of 20, Bitcoin will remain weak.
To trade the downtrend, we are planning to use one of our Forex trading accounts to go short in the cryptocurrency. The ideal entry and exit levels 11,000 and 8,000. While opening a short position, we would certainly place a stop-loss order above 12,500.
Our Binary Options Trading Plan
Ethereum. As discussed above, this currency is not merely a store of value. The platform is getting adopted at a rapid pace by businesses. The currency fell yesterday due to overall bearishness in the crypto market and not due to any other fundamental reason.
Thus, we expect Ethereum to bounce back sharply in the next few trading sessions. Technically, the Williams’ Percentage Range indicator is reflecting an oversold scenario. Thus, we can expect a bullish reversal soon.
To capitalize on the probable trend reversal, we may invest in a call option. Before investing, we will make sure that the binary broker offers a contract valid for one week. Further, the Ether token should be trading at about $880 in the cryptocurrency market.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
