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Weekly Forecast: Crypto Markets Show Poise as Bitcoin Dominance Rate Falls Below 51%

Could this be the week that cryptocurrencies shake off the bearish headwinds? A look at bitcoin’s price action suggests that a more sustained recovery may be afoot. The leading digital currency by market capitalization led a convincing breakout on Saturday and has now recovered 22% from last month’s swing low.

The debate over bitcoin exchange-traded funds (ETFs) is also expected to heat up after Labor Day, as the U.S. Securities and Exchange Commission (SEC) prepares to deliver a verdict on a promising proposal by VanEck and SolidX. Although a verdict isn’t expected until Sept. 30, speculation will continue to divide investors in the coming weeks. Markets largely shrugged off the SEC’s wholesale rejection of nine bitcoin ETFs nearly two weeks ago.

Bitcoin’s Next Move

Bitcoin rose to fresh one-month highs on Saturday as price action confirmed a bullish crossover for the digital asset. The crossover between the 50-day period average and 200-period MA suggests that the bulls are in control of the market, at least in the short term. The gains were not only technically significant, they defied expectations of a bigger reversal following last Thursday’s sudden breakdown (BTC briefly entered into overbought territory after initially crossing $7,000).

On Sunday, the bitcoin price clocked new monthly high of $7,429.20 on Bitfinex. Trading volumes on the exchange surged to 40,743 BTC, which was more than double the levels observed just 24 hours earlier. Bitcoin’s total market turnover on Sunday was 614,828, which was equivalent to $4.4 billion, according to CoinMarketCap.

Bitcoin is clearly charting a higher path, but could run into resistance as overbought conditions materialize. BTC’s relative strength index peaked at 70 on Saturday and has since fallen back to the mid-60s. Bitcoin’s recent performance suggests that future gains will likely be a slow grind rather than the double-digit growth that accompanied previous bull markets.

The contrarian view, which was recently expressed by Michael Moro of Genesis Trading, suggests that bitcoin was still vulnerable to a bearish reversal, possibly down to the $6,000 range. In Moro’s view, the key to bitcoin’s continued growth is how well price can hold $7,100.

“What you need to see is the less violent moves of 5% up, 10% up, and a slow and steady growth across the exchanges,” he said, according to CCN.“What I also think is important is I think the market now understands that the SEC’s ETF approval isn’t any time soon.”

Where Bitcoin Goes, Other Cryptos Follow

Cryptocurrencies have more or less moved in lockstep with bitcoin in recent months, a trend that is expected to continue so long as BTC controls more than half the market cap. It therefore comes as no surprise that altcoins and tokens are testing monthly highs following bitcoin’s bullish reversal.

The combined value of digital currencies peaked near $240 billion on Saturday, the highest in a month. At the time of writing, the market was valued at $236 billion, which is $47 billion higher than last month’s low.

EOS, IOTA and Monero – coins that were extremely oversold amid the latest downturn – have been among the biggest gainers of the past week. Bitcoin cash has also exploded higher amid uncertainty over a potential hard fork. As Hacked reported on Saturday, there are many moving parts to the controversy, “including BitcoinABC, which is a “full node implementation of the Bitcoin Cash protocol,” Craig Wright (who once claimed to be Satoshi Nakamoto) and his company nChain, which is behind Bitcoin SV (Satoshi’s Vision), which is designed for “miners who support Bitcoin’s original vision.”

The Week Ahead

The following is a high-level overview of the major market-moving events this week.

Monday

The World Blockchain Forum will commence on Monday in London for a three-day summit focused on crypto investments and initial coin offerings. In South Korea, Mass Vehicle Ledger (MVL) will release the details of its participation in a government project focused on smart mobility.

Tuesday

The Reserve Bank of Australia (RBA) will deliver its latest policy decision on Tuesday. The central bank is widely expected to keep interest rates on hold at 1.5%.

In North America, the Institute for Supply Management (ISM) will release a closely-watched report on U.S. manufacturing PMI.

Wednesday

Wednesday will be an active day in the world of crypto. Dogecoin developers are scheduled to livestream of a demonstration of their Dogethereum demo Wednesday. Separately, VeChain is scheduled to announce a new partnership with a major automaker.

Digital currency exchange Bittrex is also expected to roll out Cardano-to-fiat listing. Beginning Wednesday, investors will be able to trade ADA/USD.

Finally, the Crypto Finance Conference in Half Moon Bay, California will begin on Wednesday.

In traditional markets, the Bank of Canada will deliver a policy verdict on Wednesday.

Thursday

Cardano is expected to update its closely-watched development roadmap on Thursday. No further information has been provided at this time. The IOTA Foundation will also host a meetup in New York.

In economic data, U.S. factory orders, manufacturing/services PMI and weekly jobless claims will make headlines.

Friday

Traders may want to keep a close eye on the ETHGlobal Hackathon in Berlin on Friday. The Hackathon will feature workshops and public forum discussions on the state of Ethereum and blockchain.

In traditional markets, all eyes will be on the monthly U.S. nonfarm payrolls numbers, which will be released at 8:30 a.m. ET.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

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