This Week in Cryptocurrencies-5/11/18

By Matthew Zeman | May 11, 2018

Bitcoin is ending the trading week on a sour note, declining by some 6.5%. The currency has broken some key support on Friday, and has fallen back below the 9k level. Some analysts have, however, sounded bullish again in recent weeks. The market may need to see a quick bounce to keep recent bullish momentum going.

The Economics of Mining

Some analysts have suggested that the economics of producing new Bitcoins could have the currency reaching for new highs. In a recent article from Marketwatch.com, this idea was discussed in detail. The article stated:

In a Thursday research note, Fundstrat Global Advisors, one of the markets biggest crypto bulls, said the bitcoin mining price dynamics have the No. 1 digital currency on track to reach $36,000 by the end of 2019.

Mining efficiency is an important facet of the cryptocurrency market, and Fundstrat said that higher hash power—the processing speed required by computers to generate a bitcoin—will propel bitcoin to a new all-time high.

“We believe the current path of hash power growth supports a BTC price of about $36,000 by 2019 year end, with a $20,000-$64,000 range,” wrote Sam Doctor, head of data science research at Fundstrat.

The company notes that the price to break-even cost metric (P/BE) provides an important support level for those mining digital currencies.”

Although the long-term prospects of Bitcoin and other cryptos may still remain bright, investors may need to see more from them before price levels are able to stay elevated at higher levels. The repeated failures of the currencies to make a run back to previous all-time highs may be viewed as cautionary by new investors.

Not only that, but the ongoing rally in stocks as well as the recent bounce higher in the dollar are also likely having a bearish effect on the sector.

The Week in Cryptocurrency Prices

BitcoinBitcoin is down some 6.5% on Friday after making a previous run towards the 10k level. The market was not able, however, to get trade above the psychologically important 10k level and has backed off once again. The weakness seen to end the trading week is also not a good sign for the bulls, and could potentially point to further weakness in the sessions ahead.

Bitcoin Cash: This crypto saw a drop of a couple hundred dollars this week and is down sharply on Friday afternoon, declining by nearly 12%. The market has been moving lower since a failed attempt at the $1800 level, and recent lower prices have inflicted some significant chart damage. The currency could be headed back towards the $1200 level before any serious buying interest picks up.

Ethereum: This crypto has been mostly range-bound between the $720 and $800 levels. It is, however, seeing some solid selling to end the trading week, down some 8.5%. Although the currency has been trending higher on the longer time frames, recent bearish price action has done some serious damage to the chart structure. Like other cryptos, the currency could see further selling in the sessions ahead if buyers do not step in quickly.

Ethereum ClassicThis crypto is also seeing heavy selling to end the trading week. Although the market has not seen a big range lately, prices are down over 14%. The chart is now pointing lower again, and the crypto may not see any significant buying interest until prices push even lower. The $16 level may be the next potential string area for buyers.

Litecoin: This crypto has shed about $40 over the course of the week, and is also very weak going into the weekend. Longer-term chart structure is poor at this point, and the market could need to dip as low as $120 or so before finding a near-term bottom.

Ripple: This crypto was also on the defensive this week, and the bulls are not showing much interest. Now that the currency has been trading below the $.80 level, lower prices could be in store before finding a longer-term bottom. Prices may need to see $.50 or so before attracting more buying attention.

The volatility in cryptos has yet to slow down, and will likely continue in the absence of any fresh, bullish catalyst.  Thus far, failed rallies have been disappointing. Strong buying on any dips could, however, be indicative of underlying market strength.

 

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