It has been a very interesting few days in the market, especially for LITECOIN and soon to follow Etherium. At current I would place us a somewhat of a stalemate between the bulls and the bears. Bitcoin has for the most part been ranging between $17,000 and $16,000 on GDAX. As I noted in a quick article here much of the arbitrage between GDAX and Bitfinex has disappeared that was at one point approaching 13 percent.
In regards to arbitrage there are still opportunities available with LTC and a Kraken/GDAX swap. Buy BTC on GDAX transfer to Kraken, sell into LTC, transfer back to GDAX and make a solid 8 percent. I pulled it off earlier this morning.
The introduction of the futures market has really done little to change the market in one significant way or the other. I believe that many were holding onto BTC in the hopes that the future market would double the price overnight. When this did not happen they began moving back over to alt coins such as Ethereum and Litecoin after realizing just how underpriced they were.
What I expect from BTC over the next few days is more of the same. I expect it to continue ranging in this zone, maybe going down and testing $15,000 or so before settling out and resuming a more realistic upwards trajectory. That said, I can likewise see Bitcoin correcting sharply downwards to test the $10,000’s. I say this due to the fact that the charts and indicators must be honored, this is fact. To that end we see that the 3 day and 1 week still show significant MACD/Signal line divergence. At some point these two lines must come together. It will happen it always does and always will. As I mentioned in my article yesterday there are two ways that this may occur.
The first being the BTC continues its ranging behavior over a prolonged period of time that allows the moving averages to catch up and accordingly shed the divergence in the indicator over a period of time. The second being that Bitcoin will experience another rapid sell off and test of the lower boundaries; a sharp correction that will eliminate the divergence in the indicators. If this occurs it will be a fast downward move of such momentum that it will bring the indicators together and then apart to the downside. Think of it as a rubber band, in that it will push past the equilibrium into a point of divergence to the downside. Bitcoin will then be able to use the momentum from the negative divergence to stabilize and continue its upwards trend.
All in all I advice caution, don’t get over extended, set stops and be prepared for a strong move downwards to honor the indicators and the chart. If we look at BTC directly prior to the introduction of the Futures market we can see that it was slowly beginning to trend down into corrective territory. Whether or not this will continue I am unsure. In looking at the longer term charts little if anything has changed. BTC got a nice bump on the 12 hour time frame post future introduction, but the momentum seems to be waning now and it is once again heading towards the south. Add to that we have not had a week over week correction in quite some time; an event that typically occurs every three months. I say trade the range, have fun make some money.
Ethereum at @ $624
I say Ethereum is still a buy, it has a long ways to go and it is technologically superior to Bitcoin. Think back to the days when we were talking about Etherium overtaking the market capitalization of Bitcoin. In order for it to even come close to that point we could see gains well past $1000. For those that missed the Bitcoin train and the corresponding profits, Ethereum could be another chance. That said the price of Alt coins will depend on what Bitcoin is doing. If Bitcoin remains strong then you can expect continued gains in Ethereum. I say buy place some good stops and ride it to the top. I bought 25 ETH at $500 yesterday evening. As Ethereum typically runs after Litecoin, I feel there is still a considerable amount of growth left in this coin.
Litecoin @ $400
This is a sell, not a buy. I’m not saying that it has reached its ultimate top but it seems to have reached a plateau. As is the case with coins you find on Bitfinex and GDAX, the GDAX version (on a run up) will shoot way above the market price of all other exchanges. As of 9 a.m. 1 LTC was $400+ on GDAX and just under $300 on Bitfinex; ergo the price will be coming down on both exchanges. Litecoin will correct and pull back to around $250-$270 or so on Bitfinex, after which the price on GDAX will drop fast. Remember the Bitfinex sets the prices so to speak and GDAX tends to follow. The markets will always balance out. It’s no different than the recent 12 percent discrepancy in BTC prices where GDAX was $19000 and Bitfinex was $15,000 a week ago; now they are basically equal and opted to meet in the middle. If LTC makes the same decision, expect a sharp mid $200’s correction followed by a slow trend back up to around $300 before it stabilizes. I am HODLING no LTC at the moment, I was in and out of it numerous times yesterday on run ups and pull backs. Exercise caution but this is not a buy at the moment.
Previous Analysis:
@pawsdog/12-11-2017-the-market-view-and-trading-outlook
@pawsdog/5ceniq-12-9-2017-the-market-view-and-trading-outlook
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