Before I get into the price action analysis of the cryptocurrency market, there is one crucial fundamental factor we need to address. First, one of the most critical legal and regulatory developments in years: As reported by CryptoPotato – Bakkt’s former CEO, Kelly Loeffler, is now a United States Senator. She is now on the CFTC (Commodities Futures Trading Commission) Committee. This is a massively bullish event that is not generating a lot of press. Having an influential lawmaker who knows the cryptocurrency market and is an advisor for the regulatory agency in charge of regulating derivatives markets is one of the most important developments of the last five years. Now let us get to the price action and analysis of the cryptocurrency markets.
Bitcoin (BTC) Ichimoku Analysis
The chart above is Bitcoin’s (BTC) monthly Ichimoku chart. The current monthly candlestick for January is the most bullish candlestick of the past seven months. Now, we are only eight days into January, so the present value area for Bitcoin will more than likely change. But even if Bitcoin moves significantly lower and closer to the January 2020 open, it will still be a bullish event. Why? Because over the past five years, Bitcoin has traded lower in January. I’ve written about this trend in prior articles, but it was also reported on January 8th, 2020, by bitcoinist.com. Ideally, we would see Bitcoin maintain this value area and even trade higher, but ultimately we want to see it close the month higher than it opened. The January 2020 candle is well above December 2019’s trading range and the current close is at the 50% range of November 2019’s body. Bitcoin continues to treat the Cloud as a primary support level. If Bitcoin is going to continue to remain above the monthly Cloud, then we need to see it close January and open February at the $10,100 value area.
Ethereum (ETH) has easily had one of the most bearish looking weekly Ichimoku charts in the entire cryptocurrency market. Yes, other altcoins are significantly more bearish and trading at new all-time lows, but Ethereum’s position is more important because it is the second-highest market cap cryptocurrency and the highest market cap altcoin. When I see an Ichimoku chart on any timeframe that has both price and the Chikou Span below the Cloud, I see a short opportunity. When the Chikou Span is in open space (won’t intercept any candlesticks over the next five to ten periods), that is an even easier decision to short. Ethereum has had one of the ideal short setups, but the price action has failed to capitalize on the short. Instead, Ethereum has traded higher. The past three weeks have seen a series of new higher lows on the weekly chart. I am very cautious about how much higher Ethereum can go on the weekly chart without facing some prompt and stern selling pressure. The next area of resistance for Ethereum is at the weekly Tenkan-Sen (154.19).
Litecon’s (LTC) weekly chart looks very similar to Ethereum’s, except that Litecoin has broken above the high of three weeks ago. Litecoin continues to remain in a naturally bearish state on the Ichimoku chart, but there is one condition that could change my view. Just like Ethereum, Litecoin is facing the Tenkan-Sen as near term resistance. However, the Chikou Span is trading right up against the bottom of the Cloud. If the Chikou Span can move above the bottom of the Cloud, then we may not see Litecoin face much resistance when it gets to the Tenkan-Sen. If Litecoin can close above the Tenkan-Sen, it would be the first time in nearly 30-weeks.