The Cryptocurrency Market — Dave's Monthly Review
After enjoying a strong bull market rally during the first six months of 2019, the cryptocurrency market hit a brick wall in July and August. For the second consecutive month, the crypto bulls watched their favorite digital currencies decline in value. All of the major cryptocurrencies generated a loss for the month of August.
Despite these losses, there was one major “bright spot” in the crypto community. The Digitex native currency (DGTX) managed to end the month in positive territory. For the month of August, DGTX gained 2.6%, while the average loss from the major cryptocurrencies was (20.3%). Why have cryptocurrencies struggled during the past 60 days? Will this trend continue for the remainder of 2019? Let’s examine the details.
Bakkt Has Been Cleared to Launch
Without question, the biggest piece of news emanating from the crypto community during the month of August was the announcement released by Bakkt on 16 August. After several delays and false starts, Bakkt unveiled its plans to launch a new Bitcoin (BTC) futures product beginning on 23 September.
This will place Bakkt in direct competition with Bitcoin futures products offered by the Chicago Mercantile Exchange (CME). The vast majority of members in the cryptocurrency community are heavily in favor of Bakkt’s entrance into the Bitcoin futures arena. They view the Bakkt news as “bullish” for the long-term direction of BTC and other major cryptocurrencies.
Contrary to popular belief, Bakkt is not a cryptocurrency futures exchange. Instead the company provides custody services for its physically-delivered Bitcoin futures product.
Essentially, Bakkt is a warehouse. Its parent company, the Intercontinental Exchange (ICE) will provide the necessary infrastructure to allow Bakkt to offer BTC futures. The launching of Bakkt is another example of the unprecedented growth that is occurring in derivatives trading within the cryptocurrency community.
In addition to Bakkt, four other firms are working with regulators to offer similar cryptocurrency derivatives products. The list includes LedgerX, ErisX, Seed CX and trueDigital. Given the dramatic increase in crypto trading volume during the past two years, there’s no doubt that cryptocurrencies will soon be regarded as a major asset class by the global investment community.
Bitcoin is Struggling to Stay Above The $10K Level
On 24 June, BTC pushed above $10K for the first time since March 2018. Bitcoin stayed below $10K for 15 consecutive months. During the past 60 days, BTC has been locked in a narrow trading range (Chart #1). The cryptocurrency has been unable to consistently stay above the $10K level. This is not a good sign for the Bitcoin bulls.
In a recent article, we discussed the probability that BTC had formed an important top on 26 June @ 13,844. So far, this appears to be the most likely scenario. Bitcoin enjoyed a dramatic rally during the first six months of 2019, rising 276%. However, BTC has been unable to record any additional gains above 13,844. Of course, the recent price action could simply be a period of consolidation prior to another explosive move to the upside.
In order to fully regain its bullish momentum, Bitcoin needs to generate a weekly close above 13,844. Until BTC records a new high for 2019, it is definitely vulnerable to a nasty decline. If Bitcoin begins to roll over to the downside, the important numbers to watch are 4,440 – 5,704 – 6,568 – 8,485 – 9,966. Please review Chart #2.
Digitex is Moving Forward
Despite a few setbacks along the way, the Digitex Futures exchange continues on its journey to becoming the first zero-fee cryptocurrency futures exchange. In May, Digitex teamed up with SmartDec for help in developing and programming the futures exchange and trading platform. SmartDec is a highly successful company located in Moscow, Russia specializing in software development, smart contract development and software auditing.
Recently, Digitex announced the exciting news that it will launch on the Ethereum public testnet beginning 30 November. This will give traders an opportunity to experience the Digitex trading platform on a real-time basis. Launching on the Ethereum public testnet will allow Digitex the ability to continue testing, modifying and enhancing its state-of-the-art trading platform. The future looks bright for Digitex!
This article was written on 28 August. Shortly after the completion of this article, Bitcoin penetrated the important support level @ 9,966. At least for now, BTC has fallen into bearish territory. Most likely, Bitcoin will drop below the next support level @ 8,485. Please review Chart #3.
Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice nor is it a replacement for advice from a certified financial planner.