In the early parts of 2018, we have already seen a strong injection of volatility in the financial arena as a whole. The VIX volatility index has risen to levels that we have not seen in a very long time, and this is starting to push many new investors out of the stock market space. The clearest alternative at this stage still appears to be the crypto currencies, as they have already been shown to benefit a great deal more from these types of situations.
Most of the analysis tends to pin itself on the trends that are seen in BTC, which has fallen off sharply over the last few weeks. After hitting highs near 20,000 Bitcoin has reversed and erased a large amount of stakeholder value in the process. But this has not eroded market interest, as the crypto space is still one of the biggest volume trading gainers of the last year.
From a chart perspective, we can now reasonably expect a trading range to develop between these upper highs from last year and the new lows that have now been out in place near 6,000. This is important because it will likely define the trading strategies that are employed by most crypto investors during the next few months.
Options trading is another area that is likely to benefit if these ranges hold through several tests. Technical analysis strategies are fairly well-defined for these types of situations and anyone looking to employ spot trading approaches can add stop loss placement on the outer bounds of this broader range.
In this chart, we have tracked the value of Bitcoin (BTC) against the US Dollar. Here it is clear that most of the actual price action has occurred over the last two years. This suggests that we are still in the very early stages of the crypto currency development and this impacts the efficacy of certain technical analysis strategies. In order to determine which top-rated ICO will lead in the market trends for 2018, it is important to reassess what these instruments will mean in terms of their relationships to key assets like the Euro and the US Dollar.
Specifically, safe haven buying has actually helped to propel the crypto currency markets and this is something that should keep the digital blockchain instruments within the front and center of the market’s mind over the next few months. For long trades, we can expect the demand levels at 6,000 to support going forward and stop losses can be placed below here for added protection in the crypto currencies.