A hint of hope for cryptocurrency markets

The appetite in cryptocurrencies improved on Monday as New York's Department of Financial Services gave Square a virtual currency licence, allowing its users to trade Bitcoin.

On the other hand, critics continue making the headlines. Lately, the Swiss based Bank of International Settlements (BIS) claimed that a peer-to-peer transfer network would rapidly meet network capacity problems, hence cryptocurrencies cannot replace traditional currencies.

Despite controversies, the blockchain technology is spreading at a rapid speed to industries beyond finance and Bitcoin, which is the sentiment gauge of the crypto-market, is holding ground above the critical $6000, hinting at the possibility of a recovery to 6850 and 7375 (minor 23.6% and major 38.2% retracements on May – June decline). On the downside, a move below $6000 should encourage a further sell-off toward $5000.

ETH/USDT sees timid inflows near the $500 level. Ethereum’s popularity remains solid, as some 50K developers join the network each month. Meanwhile, the confusion about Ethereum’s status (cryptocurrency or stock) leaves the alternative markets in wait-and-see mode. However, such discussions are promising for Ether-bulls, as they confirm Ethereum’s solid underlying fundamentals. Buyers are touted sub-$500 for a recovery toward 590/605 area, including the 38.2% retracement on May- June decline and  the 50-day moving average. A move below 490 (weekly pivot) should compromise the strength of the recovery.

Bitcoin Cash is testing the solid 820-support, while the negative momentum is slowly losing pace across the crypto-market. A bullish reversal in sector sentiment could encourage traders to return to BCH/USDT at the current levels and push the pair toward 915/945, weekly resistance area. A broad-based improvement in risk appetite is needed for a further recovery toward the critical $1000 threshold. BCH/BTC trades below the 200-dma (0.13). Stepping into a sector-wide bullish consolidation phase should give Bitcoin Cash the opportunity to regain field against Bitcoin, due to its advantages in terms of speed and scalability.

LTC/USDT consolidates below the $100 level, yet a sector-wide improvement in sentiment should send the pair above the 100 threshold.

The major positive news is Litecoin’s listing in itBit, which is an exchange regulated by New York Department of Financial Services. Moving forward, a market-wide recovery should give a better hint on Litecoin’s ability to stay on top of the list.

We remind that Litecoin has been bleeding as users move toward more promising cryptocurrencies. Litecoin’s latest campaigns couldn’t attract enough attention to reverse its negative course.

Opinion: Bitcoin, a powerful sentiment gauge

Bitcoin is the first and the most popular cryptocurrency in the market. Almost every professional and retail trader has already heard about Bitcoin, considered trading or traded it.

Bitcoin’s popularity is mostly due to its underlying blockchain technology, a technology which has all to seduce investors looking for futuristic ideas. And there is no doubt that an internet based, and a decentralized technology could well be the future. In the same way than the arise of internet has changed the world two decades ago.

Because Bitcoin is the first cryptocurrency, it has a specific role compared to altcoins. It represents the confidence that investors have in the blockchain technology.

This is why, Bitcoin has often acted as a powerful sector-sentiment indicator. When Bitcoin gained, altcoins gained. When Bitcoin stalled, altcoins failed to attract investors as well. Though this behaviour is expected to remain true for the foreseeable future, Bitcoin’s ability to gain momentum may have been weakened.

Weakened upside momentum

Bitcoin trades sideways with limited momentum on both directions. For now, it is unsure why investors are reluctant to return to Bitcoin. One possible explanation is that the interest in cryptocurrencies could disperse to altcoins, which have improved characteristics compared to Bitcoin.

In fact, Bitcoin rivals frequently come up with improved features in terms of speed and scalability. Many propose decentralized applications, Dapps, which could be used for transfering monetary value, but also all type of information. As a result, the use of the blockchain technology spreads to numerous sectors, including social networking, online gaming, tracking, logistics and supply chain management.

The rapid sector development raises an important question: has Bitcoin become outdated?

Future of Bitcoin

When it comes to the future, it is often hard to predict. The time will tell how Bitcoin evolves. Though we know that it will go down the history as the ‘ancestor of cryptocurrencies’.

However, given the administrative rigidities in Bitcoin, it is well possible that the latter loses investors’ interest in the future. We are talking about a fast, emerging market. The flexibility, improvement and innovation are the fundamental factors that define the value of a project, company or conglomerate.

There is still a wide-ranging speculation that Bitcoin may rally to significantly higher levels, such as 25K, 50K or even 100K. Yet, it is well possible that this scenario never realizes. A rally similar to the 2017 may never happen again.

In fact, the dispersion in crypto-interest will likely weigh on Bitcoin's ability to gain momentum.

However, we note that a weaker momentum does not mean that Bitcoin will be valueless in the future. If the markets are brought to treat Bitcoin as they treat gold, Bitcoin could maintain and increase its value despite the capacity limitations from a technology standpoint. Hence, this is one possible scenario that could grant a bright future for Bitcoin.

---