3 Major Catalysts for Cryptocurrencies in 2018 – Time to Buy Now?

Since the highs in December 2017, Bitcoin and most cryptocurrencies have seen a sharp decline, and agile traders/investors have mostly exited to await better buying opportunities. This includes myself, and after cashing out my profits in early 2018 (after the double top reversal), I have been waiting for the past few months for a timely opportunity to get back into the market.

Despite the volatility, I am still optimistic for the long-term potential of Blockchain and Cryptocurrencies, hence it is important to know which catalysts will likely move the prices for 2018, and when is the optimal time to get into the market.

1. Increased Regulation

At first glance, this might seem like a bad thing, as many countries around the world (China, Australia, Taiwan, Philippines, US, etc) start to clamp down on Crypto-related activities, or impose some kind of restrictions and controls. And prices reacted to such news of regulation negatively as expected, with a prolonged downtrend lasting several months.

However, what most people don’t realise is that such regulation is actually a good thing in the long run, and necessary for Cryptocurrencies to become more “mainstream” and widely adopted. Which means that while we can expected prices to fall, it is also a good catalyst to enable us to buy these assets at lower prices in the future. Timing is key.

2. Institutional Funds

Once their is sufficient regulation and prices are low enough, institutional investors (hedge funds, asset managers, etc) are likely to come into the market. This is where the big moves are going to come from, as we saw from the dotcom boom. And recently, we have heard some news/rumours that big names like George Soros, Rothschild, Rockefeller, etc are starting to come into the market.

If we look at the graph below, we can see that a major trend is usually driven by institutional investors, which means that despite the meteoric rise of Cryptocurrencies over the past few months, it is still nowhere near a bubble, since the “real big money” from institutional investors have not started to pour in yet.

Imagine a future where fund managers and pension funds all include Cryptocurrencies as one of the asset classes in their portfolios, together with stocks, bonds, gold, etc. This will definitely create a huge demand for it, and push up prices faster than we have ever seen.


3. Scale & adoption

One major debate is whether Bitcoin (and other cryptocurrencies) can serve its purpose as a global currency with a stable store of value, and cheap & fast transactions. Currently, it is not there yet, and how fast it can get there will depend on how well the product can be improved. The volatility will naturally decrease over time as the market cap increases, but the speed and cost of transactions will depend on innovations and improvements from developers.

Is it a Good Time to Buy Now?

Personally, I have starting accumulating it for the past week or so, as evinced by the recent charts I have been posting. Looking at the chart below, we can see that prices have corrected from $19k+ to around $7k, where there is strong support, forming a potential double bottom.

And if the regulation starts to tone down and more institutional investors start coming it, this will be a pretty good confluence of factors to expect a further increase in prices.

 

I will be happy to continue accumulating as prices and fundamentals continue to improve. Stay tuned! 😀

 

How to Combine Price Action with Multiple Timeframes

One of the simple yet powerful techniques I use to allow me to quickly identify trading opportunities with minimal time and effort (typically 15 minutes a day), is to use this Excel table which combines price action with multiple timeframes.

To create this table, I observe the daily and weekly charts of various products (forex, stocks, cryptocurrencies, commodities, etc), and list down whether I think it is bullish or bearish on each timeframe. For the weekly chart, I only need to update it once a week, and for the daily chart, this takes me a few minutes a day.

Here are some chart examples:

This is the daily chart of the EUR/USD, and you can see that it just completed a pullback and is looking bullish. So under EUR, I mark it as bullish. For most products, I always benchmark them against the USD for easy comparison.

 

This is the weekly chart of the EUR/USD, and you can see that it is also very bullish, and rebounding off a large trendline. With the alignment of both the daily and weekly trends, this make the EUR/USD a very good long trade to be in. And since the GBP is also weak, going long on the EUR/GBP is also a good idea.

 

For the S&P 500, the long-term trend is bullish, but the short-term trend is bearish. In such a scenario, we will pass and wait for more price action. The goal is to take the best trades, not take as many trades as possible. Quality over quantity.

At the start of every week, I will be posting the updated table on the Synapse FB page, with the best trading opportunities for the week. For those who do not have much time to trade, this will be an easy way to find good trades without having to use any complex indicators/software/algorithms.

Follow-up on Bitcoin Short: When is A Good Time to Buy? (Bonus: ETH Analysis)

In my last blog post here, I called for Bitcoin to drop from its current $13k+ to between $8k and $10k, using the measurements of the swing counts.

Now, the price of Bitcoin has fallen below $10k, but I am not planning to catch a falling knife, so I will wait for the fall to end and the dust to settle, before entering the “post dot-com landscape) and buying up coins for cheap.

One of my readers also suggest an analysis for ETH, and I have posted the analysis here inside the “Live Trading Network”, which you can gain lifetime free access with just one click.

Thanks, see you soon!

Chart of the Day: Detailed Bitcoin Analysis

Based on the latest chart of Bitcoin, it looks like it is undergoing a major correction.

After hitting highs of almost $20k, it has started to form a corrective pattern between $12k and $17k, and there could be more to come.

After the first initial move down (the blue sell arrow) which was mentioned in our previous blog post, there was a corrective a-b-c wave, which could be a corrective wave within a larger corrective wave, with the 2 pink rectangles being wave a and wave c respectively.

If that is the case, the end of wave c will be around $9k, which is quite close to where the old trendline is.

Lastly, we also pulled out a Fibonacci Retracement on the whole price history of Bitcoin, and drew in a red rectangle to indicate the 50-61.8% retracement range. For major corrections, this is where it usually ends. If it breaks below the red rectangle, then it becomes a reversal instead of a correction. The red rectangle is between $7.5k and $10k.

For conservative long-term investor, you can wait to accumulate inside the red rectangle.

However, if price goes above point c (around $17k), then it would invalidate the pattern, and the uptrend would likely continue to surpass $20k, so I am prepared to buy on a break above $17k as well.

Crypto Portfolio Update (11/01/18): 294.86% Profits Over 42 Days!

Just did a quick rebalancing of my Crypto portfolio, which is currently up 294.86% returns after 42 days.

Took profits on some huge gains like Lisk, NEO, Monero, Achain, ZenCash, VeChain, and Request Network.

Added/opened positions on some that have dipped slightly, such as Ripple, Stellar Lumens, Cardano.

Lastly, I increased cash position to 10%, in case there is a buying opportunity on a correction, since prices have been going up quite strongly recently. If prices continue to go up another week, I might increase cash position to 15%.

Remember to trade cautiously, and not be too greedy!