Bitcoin, Dogecoin, Robinhood: Last Week in 3 Words – Analysis, 1 Feb
On Thursday, investing app Robinhood blocked purchases of GameStop, AMC, and BlackBerry stock as trading on the stock market surged among retail users. Many users started to complain that they could not trade GameStop and other shares, and also their functionalities in the Robinhood platform are limited.
This event attracted the attention of the crypto community immediately because it is a typical example of how centralized financial markets can punish their participants - in most cases, the small investors.
Many cryptocurrency enthusiasts saw this event as the beginning of the end of Wall Street's dominance in the financial world. Tyler Winklevoss, illustrious crypto bull and founder of Gemini crypto exchange, said that the withdrawal from Wall Street into Bitcoin and crypto has begun:
Tesla founder Elon Musk, who in January became the richest man on the planet with a net worth of over $180 billion, added Bitcoin to his Twitter account bio:
Moreover, the billionaire underlined that this move was inevitable:
This was the very first time Elon Musk indicated openly his support for the cryptocurrency market – a long-awaited event from the crypto community. Instantly the crypto market reacted very positively. For example, the price of Bitcoin jumped from $32,000 to $38,000 just within a couple of hours.
One thing is clear – it is just a matter of time for the mass migration of retail investors from the stock mark into the crypto world to start.
After another volatile week for the crypto market, the Monday market starts with price consolidation. At the time of writing, according to Coin360.com, one Bitcoin costs €28,301.24 (+2.86%), one Ethereum – €1,094.82 (-1.25%), and one LINK – €18.45 (-2.54%):
Source: Coin360.com (Daily crypto market performance)
Now let us look at the price charts of the most popular cryptocurrencies in the key time frames.
In the monthly time frame (MN), BTC/EUR formed a candlestick similar to a Shooting Star for January:
According to the technical analysis theory, a Shooting Star is a bearish candlestick formation with a long upper shadow and relatively small body. It occurs after a substantial price advance and indicates the price could start to fall.
However, traders typically wait for confirmation – if the next candlestick is a bearish one, they may start opening short positions.
Nevertheless, we still think that the current Shooting Star only indicates the bulls are temporarily facing resistance, and it is still possible for the uptrend to resume. In the 4-hour chart (4H), BTC/EUR is still within the Descending Triangle – a trend continuation pattern:
According to the chart above, BTC/EUR is at the lower line of the triangle at the moment. If it exits the triangle successfully, many traders will start to open long positions again.
January was an extremely positive month for Ethereum. ETH/EUR formed a big bullish candlestick that was able to surpass the key level of €889, a level equal to the closing price in January 2018 and opening price in 2018 – a period when the all-time high formed:
In our view, the bullish candlestick from January confirms the continuation of the bullish sentiment. Hence, the uptrend in the monthly time frame remains in place. The level of €889 per one Ethereum will serve as strong support.
In the 4-hour chart (4H), ETH/EUR continues to move forward within the Rising Wedge:
If the price bounces off the lower line (support line) of the wedge, then a favorable moment to open a long trade may occur.
In the 4-hour chart, LINK/EUR continues to fluctuate within the Ascending channel (uptrend):
The market sentiment remains bullish. However, LINK/EUR is at the lower line of the channel at the moment. If it does not receive enough support and rebound, then a sell-off may take place, and LINK/EUR may return into the old Ascending channel (old uptrend).
No matter in which of the ascending channels LINK/EUR continues to move, the traders will try to take advantage of the bullish trend and buy more LINK.
How to trade an Ascending channel we already explained in one of our previous market analyses.
Dogecoin was among the best performers this past week. The price of the cryptocurrency increased almost ten-fold from $0.007 to $0.07 a few hours after Musk put the Bitcoin logo in his Twitter bio. Dogecoin is known to be a token about which Musk likes to tweet.
So, in the 1-hour chart (1H), DOGE/USD skyrocketed:
As can be seen from the chart, now the price of Dogecoin is undergoing a correction. However, a few hours ago, DOGE/USD could break through the resistance line, and it is trying to resume the price increase. No doubt that some more aggressive traders will try to enter the market again and make some fast return of 20-40%.
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The analysis is purely informational and does not constitute investment, financial, trading, or any other sort of advice and you should not treat any of Bitvalex's content as such. Bitvalex does not recommend that any cryptocurrency should be bought, sold, or held by you. You are solely responsible to conduct your own due diligence and consult an advisor before making any investment decisions.