The sentiment toward the Cryptocurrency sector has turned to wildly bullish.
Not only has the number of google searches for “Bitcoin” surged, as shown on the left, but so have tweets.
We’ve anticipated this rally now, in two recent posts. “Crypto Rally Imminent”. (https://markonomics101.com/2019/02/21/crypto-rally-imminent-chart-of-the-day-15/). And, as recently as one week ago, we gave breakout levels and target upside positions. “Cryptocurrency Sector Ready To Rally Despite Reports of FAKE Bitcoin Volume”. (https://markonomics101.com/2019/03/31/cryptocurrency-sector-ready-to-rally-despite-reports-of-fake-bitcoin-volume/)
Breakouts and Upside Targets
The Slideshow below reveals Upside Targets and Resistance Levels. A few key takeaways are as follows:
- The Cryptocurrency Sector, at $176 Billion, is up 17% from its breakout point and has 22% additional upside to its target of $215 Billion.
- Bitcoin has traded up to $5,000, up 17.5% from resistance at $4,250 and has 22% additional upside to its target of $6,100.
- Ripple and Ethereum are both laggards. Ethereum has failed to move its pattern BULLISH. Both have very little upside to their next price targets.
- Bitcoin Cash and Litecoin have been outperformers and have plenty of upside remaining.
Litecoin and Bitcoin Lead
Below is a second Slider of Relative Performance. Some of the key takeaways are as follows:
- Ripple (XRP) and Ethereum (ETH) have both underperformed Bitcoin (BTC), which is the proxy for the overall market.
- Litecoin (LTC) and Bitcoin Cash (BCH) have both led the recent rally and showed positive relative strength PRIOR to the upside explosion. They have been the best performers. LTC is up 400% from its lows.
Bitcoin’s Fans Claim it Will Surpass Visa and Paypal in Transaction Volume
A startup software firm, called DataLite, has released a report predicting Bitcoin will surpass the volume of other popular payment systems like Visa, Mastercard, and Paypal. (https://www.zerohedge.com/news/2019-04-05/will-bitcoin-beat-visa-mastercard-top-world-payment-system-within-10-years).
That conclusion seems to be quite a stretch. Bitcoin transactions per second are 3 to 4, Paypal is 193, and Visa handles 1667 per second. Bitcoin is growing at 25% per year, but even if that continued for the next decade, Bitcoin would grow to only about 30 transactions per second. (https://mybroadband.co.za/news/banking/206742-bitcoin-and-ethereum-vs-visa-and-paypal-transactions-per-second.html).
Entities that accept Bitcoin are mostly small and few are being added. (https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/). In addition, Bitcoin has also LOST much larger firms like Expedia. How it could possibly surpass Visa or Mastercard is very hard to demonstrate without pure wishful thinking.
Sentiment Turns Wildly Bullish
Bitcoin’s volume on the Chicago Mercantile Exchange has exploded during the rally. The volume on the Chicago Board Options Exchange, which will delist Bitcoin Futures, has dwindled to almost nothing. (https://www.coindesk.com/bitcoin-futures-volume-is-more-significant-than-you-think-bitwise-says).
In China, search engine Baidu has recorded a HUGE number of searches using Bitcoin as the key word. China, it would appear, has been stricken with Bitcoin Fever. (https://www.ccn.com/bitcoin-is-1-trending-on-chinas-biggest-search-engine-during-2019-highs). Heightened interest in Bitcoin is likely to carry it higher. Whether the Cryptocurrency Sector can exceed the targets laid out in our first Slideshow remains in doubt. If the Federal Reserve stokes another asset bubble, as we have recently speculated, then Cryptocurrencies may rally even further. “Federal Reserve Stokes Another Bubble” (https://markonomics101.com/2019/03/22/federal-reserve-stokes-another-asset-bubble/).
Is It Too Late to Buy?
It’s important to keep in mind that owning a Cryptocurrency is not an investment. You own nothing, no technology, no assets, no patents, and no cash flow. It has ZERO investment merit.
However, short term trades are governed by money flows as revealed in the charts. It is still our view that there is further to go, but the higher Cryptocurrencies go, the less upside remains. Traders ought to place stop limits at the breakout points to avoid possible losses. For example, Bitcoin’s breakout price of $4,250 ought to be a logical sell point, if the rally is short lived. It very well may be.
Traders should pay close attention to relevant information without buying the BULLISH arguments, like surpassing Visa.
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