The Neironix analytics department conducted a study of the cryptocurrency market and summed up the results of the outgoing week.
Over the past week (October 26 — November 1), bitcoin has grown significantly: from $7,400 to a maximum of $9,100 at the moment. Thus, the growth was 22%, while the maximum mark reached by the Bitcoin chart was $10,350. It is an increase of more than 40%, and we note that this is the third-highest growth rate per day for Bitcoin in history. Previously, this only happened in 2010 and 2011.
Thanks to this leap, Bitcoin's capitalization has increased by $30 billion, and amounts to $165 billion at the end of the week. The trading volume also increased significantly, which at the beginning of the week amounted to $15 billion. Now, this value is at around $26 billion, and at the peak moments of growth, this value reached $50 billion. That is, the increase in trading volume per day was more than 200%!
At the same time, the dominance of bitcoin has increased, which now stands at 67.5%. Recall that earlier in the month, this indicator fell from 71% to 66.1%, which means an increase in altcoins. However, the last strong movement of the heading cryptocurrency has shown that it is Bitcoin that affects the direction of the market.
Such a sharp increase is associated with positive news from China, which we will write about below. Now we note that such a strong movement has significantly increased daily volatility, which has gradually decreased by the end of the week.
In addition to China, growth was due to a large number of negative sentiment in the market. Most of the players decided that it was necessary to get up in short positions. As a result, we saw that when the price moved up, a massive number of short-positions has closed in the stop. When this happens, the exchange rate opens up a free space, which it fills as much as possible until either it runs into a new resistance or the seller's movement runs out. At this time, precisely the second variant took place. By the way, it is worth saying that only on the BitMEX exchange there was a liquidation of short positions totaling $400 million.
After such a sharp movement on October 25, 2019, the price moved into the consolidation phase and formed a "triangle" shape. Buyers tested the trend line several times, but they were not able to break it. Volatility is also decreasing. Judging by the figure, the exit from it is expected in the coming days, with a higher probability of decline.
We think so because the strength of buyers has dried up, and because the 0.382 level on the Fibonacci retracement has evolved from a support level to a resistance level. Besides, we still have not closed the gap, which formed on the CME chart at $8,600.
Although growth to $10,350 broke the local structure, however, the price still rests against the global downtrend from June 26. But at the same time, we finally saw an essential situation on the moving averages indicators.
So, the price of bitcoin came out from under the 200-day EMA, and fixed above it. If you read us before, you know that this indicator is a powerful support for the price of bitcoin, from which it often repels. Besides, the 20-day EMA finally crossed the 200-day and settled above it, and the 50-day EMA turned to grow. It is also a good sign, so in the case of the intersection of the younger moving averages EMA200, we would expect a significant fall.
The RSI indicator after a sharp jump returns to the balance zone at the level of 50%. But the stochastic speaks of a possible fall in the coming days since October 26 touched a maximum and is now correcting.
In general, the overall picture begins to show signs of growth. However, first, you need to correct after such a sharp jump in prices, after which it will be possible to talk about a further increase in the rate of bitcoin.
What was the reason for such impressive growth?
At the 18th meeting of the Politburo of China, President Xi Jinping said that blockchain is the most innovative technology in the world at the moment, and their country should become a leader in this sector. Also, there are new rumors about the launch of the Chinese national cryptocurrency, which is supervised by China's leading blockchain accelerator DCEP. This information provoked such a sharp demand for bitcoin that it grew by 40% per day. Besides, in the Chinese search engine Baidoo and the WeChat messenger, the number of mentions to the word "blockchain" increased to 100%, instead of the previous 2-3%.
Also, this week, news came out that Bakkt was not going to stop only on futures and options. Together with Starbucks, the company plans to launch an application with which one can pay for purchases in famous coffee shops.
Besides, more news from China appeared at the end of the week. The two largest mining companies in the world — Bitmain and Canaan — are going to go public. And Canaan is going to do this in the United States, and wants to raise $400 million. It also became known that the Chinese corporation Tencent is developing invoices based on Blockchain technology. We want to note that Tencent is on the 5th place in the list of companies with the largest capitalization, second only to US giants.
How was the week for coins from the Top-10
Once again, we see how much Bitcoin affects the whole market: all the coins from the Top-10 have showed a quite high growth, as a result of which the average rate of price change was +15%. Recall that a week earlier, this value was at around 2%.
Growth leaders, if not taking Bitcoin into account, were Bitcoin Cash (31%), EOS (18%), and Binance Coin (18%). Such a sharp increase in BCH is immediately associated with two news. The first is about Cihan Wu`s taking complete control of the largest mining company in the world — Bitmain. As we know, he is a big supporter of Bitcoin Cash. Also, this week, the crypto world learned that Bitmain is going to go public IPO to attract investment for the company development. Thanks to this news, BCH was the only coin in the Top-10 that was able to overtake Bitcoin by weekly growth.
The rest of the leaders were able to grow, mainly due to news from China. Therefore, we see that they all added approximately the same — about 15%. Except for USDT, the only coin that showed weak growth was XRP (5%).
The dominance structure has changed a bit: Tether and Bitcoin Cash have swapped places. Also, most coins have reduced their dominance. The only assets that increased this figure were Bitcoin, Bitcoin Cash, and Bitcoin SV. It's also quite an interesting fact, which suggests that the community is willing to buy any coin from the top 10, if it contains the word “Bitcoin” in its name, which increases the price of the coin, its capitalization, and therefore the level of dominance.
How was the week for coins from the Top-100
Despite the rapid growth of the entire market, 15 cryptocurrencies from the Top-100 showed negative dynamics. But the average value of the change was + 24%, which is six times more than the same indicator last week when its value was 4%.
The growth of bitcoin provoked such healthy growth of altcoins in the Top-100 that almost half of them increased by more than 15%. Moreover, the growth of leaders amounted to tens of percent. However, if we consider the change in price relative to Bitcoin, then 80 coins showed a fall. Its indirect evidence by the level of bitcoin dominance, which is just a day on October 25-26, increased from 66.2% to 68.6%.
An exciting feature of this week was the fact that after the growth of bitcoin, we saw a massive increase in the rate of coins for projects that are based and developed in China. Within three days, the top-10 leaders in daily growth were represented only by Chinese projects. Nevertheless, by the end of the week, the hype around the news had decreased, and this effect had passed.
The leaders of weekly growth have fantastic indicators. Each of the five leaders has grown by more than 50%! The average growth rate was 245%. Even if we exclude Noah Coin, the average growth was 89%! Looking at these numbers, it becomes apparent how much news from the Chinese leader influenced the market.
Such a sharp growth by 870% of leader Noah Coin is associated with information about the swap of their coin to another chain. But there is currently no information about this. As we became aware, such strong growth is related to the manipulation of some Korean stock exchange, which could happen due to the low trading volume. As a result, in just a day, the coin increased tenfold and took 45th place in the list of Top-100 coins.
In second place is the Chinese project Bytom, a coin of which in just a week showed a growth jump of 114%. The primary growth of the cryptocurrency occurred during the growth of bitcoin — it was at October 25-26. At that time, growth was almost 300% per day. After that, the price began to adjust back. Besides, the project carried out a network update in which the team added new features. A little later, it became known about the launch of trading on the MXC Exchange. In the aggregate, these factors caused such a severe growth of Bytom.
Only one coin this week showed a significant drop — Swipe (-41%). Because of this, the average decrease in leaders was -13%, but if you exclude this project, the fall was only 6%, which is a tiny result for the weekly timezone in the crypto industry.
The current fall of Swipe was a consequence of previous events. In September and October, there was a lot of news on the project. So in September, the project was added to the significant exchanges Bithumb and KuCoin. Also, the Swipe team held a contest at them, as a result of which they distributed Swipe tokens for the total amount of $ 50,000. Then Swipe project announced strong partnerships with BitGo and Coinbase Custody in early October. And after this, they held a contest on October 29 with the distribution of Swipe tokens. And then, the Swipe price began to fall rapidly because contest participants began to sold these coins massively.
Other coins lost in price slightly relative to the dollar and have more of a correctional structure than a fall due to some events and news.
Crypto Industry at Google Trends
The graph shows how much requests for the word "Bitcoin" increased during its growth by 40%. And subsequently, this value slowly decreased to a level of 28%. The number of requests for the remaining keywords did not change, from which we can conclude that the growth of bitcoin did not affect the interest of the general public.
Total market capitalization increased by $38 billion for the week to $ 244 billion at the time of writing. Trading volume increased significantly (by 50%), and is at around $84 billion, and during growth, this value set a new record, which now stands at $144 billion. Thanks to such a rapid growth of bitcoin, the entire cryptocurrency market has grown significantly, and now it has entered the consolidation phase.
We saw how much news can affect the market. In just a day bitcoin has grown by 40%, which is almost impossible in large markets. This once again proves that the crypto industry is still very young, and price movements in it are due to the news background.
Separately, we should say about China. For a long time there were no official statements from the authorities of this country. And everyone knew well that cryptocurrencies are banned in China. As soon as the General Chairman of the PRC spoke in support of blockchain technology, the monthly negative background changed dramatically to a positive one. Therefore, it is necessary to understand that it is impossible to underestimate such major market players as China, even if their government remains silent on the topic of blockchain.
Events in China have also affected the altcoin market, which has largely increased against the dollar. And the undoubted leaders among them were the Chinese projects.
Such a sharp growth can not happen painlessly. A lot of traders and investors lost their money, hundreds of millions in just one night. After such events, a correction is inevitable, so think twice before applying to the FOMO effect.