The news on Bitmain today brings Bitcoin Cash back to the forefront of the technical picture as we look for signs of distressed selling and a possible major dislocation lower.
Looking at Bitcoin Cash (BCH) on both Coinbase (Figure 1) and Bitstamp (Figure 2), we see that BCH has just hit and obviously rejected big Fib speed resistance lines. On the charts of both exchanges, the setup is the same as from the start of the November crash. These charts, along with the potential for distressed selling from Bitmain, may create systemic risk for crypto.
Another Bitcoin Cash (BCH) problem is how it could spill over into Ethereum (ETH). The Fib speed line picture for Ethereum (ETH) shows today’s 15 percent plus down move looks just like the start of the last two Ethereum (ETH) crashes in July and November (Figure 3). The upcoming Ethereum hard fork harkens ghosts of the Bitcoin Cash (BCH) hard fork that ignited the November avalanche.
The same Fib speed line structure exists in crypto total market cap (source: Coinsignal.trade).As with Ethereum (ETH), the structure is the same for the July and November dislocations lower in total market cap (Figure 4).
Bottom Line: We believe that these visuals are relevant going forward. This may be “deja vu all over again” with a Bitcoin Cash (BCH) issue hurting the market.
The good news is that Crypto.IQ Trading Desk has been on top of the Ethereum (ETH) down move from the start. My analysis benefits from this group, especially when they stay one step ahead of the charts and the market.