»Fast Profits Daily by Equitymaster

On This Day - 13 OCTOBER 2021
Cryptos: Bitcoin and Ethereum are Trading Bullish

Brijesh Bhatia, Research analyst

This video is all about cryptos. I'll share my view on this exciting asset class with you.

I did a video early this year stating that bitcoin could reach six digits this year.

Well, I stand by that view. Today, I will dig deeper into the price action in bitcoin.

I will also cover the second most popular crypto ethereum.

Watch the video and let me know your thoughts about cryptos. I would love to hear your views.

Hello viewers. Welcome to the Fast Profits Daily. Myself Brijesh Bhatia.

In the last few weeks, equity markets have been roaring higher and higher. Nifty testing 18,000. The new milestone has been achieved onto the Nifty 50. But here in this video we are not going to discuss about the equities but a new segment is called crypto.

Well, it is a new asset class which is being attracting most of the customers I would say. Since its high in May 2021, we saw a deep correction somewhere around 50-55% of correction into the most of the cryptos.

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If I just look at the total crypto marketcap, we made something around US$2.5 trillion. We fell back towards US$1.2 trillion mark and then slow and steady coming back towards US$2.4-2.41 trillion mark.

So we think that, yes, this is going to be very, very bullish as we step into the new Samvat 2028 which is into the Diwali. Even in 2022, we expect that crypto again can see a huge bullish momentum for next 6 to 12 months.

 

Let's look at the first chart over here. This is the total crypto marketcap. It is created by the tradingview.com, and we have taken charts from there as well. So if you look at it, as I said from the May 2021 highs of somewhere around US$2.5 trillion mark to US$1.1 trillion mark on the down side, coming back towards US$2.4 trillion mark.

So we have seen since May to October now it's a nice U-shaped recovery coming into the total marketcap of cryptos. In the recent times again there was a small U-structure forming and if I look at the whole structure, this is forming a cup and handle formation on the total marketcap.

So once we breach again about US$2.5 trillion mark, we expect that this would be the fresh momentum into the crypto segment. Again, I am not talking about the newer cryptos or smaller cryptos, but I was looking at the larger ones. So let's first look at bitcoin over here.

 

Bitcoin is, if I look at the marketcap, the largest marketcap in the crypto basket. If I look at the whole structure over year, since the fall, it is forming a Wycoff accumulation theory. So what does it indicate?

Basically, this theory indicates that when the accumulation happens by the smart investors, by the big players, small players don't tend to get identified by this theory, but when the smart players start accumulating this instrument or asset class, which is the Bitcoin at the current point on the chart, the slow and steady accumulation is very, very minuscule, so that it doesn't hurt the prices for these smart investors, and they accumulate slow and steady.

If I look at the whole structure, it has taken time to accumulate the bitcoins and now, after testing or after taking the shakeout, which is generally known as the spring, where the weak hands are taken out, where those people keep a stop loss of slightly below the previous low. So if I look at 29,000 was the previous low, we made a low of 28,600, and since then there was no look back.

We are looking at the bitcoin going higher and higher, forming a higher-high, higher-low structure. From US$29,000 mark we came back toward US$50,000 mark. We retested the breakout level again, which is generally known as SOS on the chart, which is sign of strength, we retested those break out which is known as backup levels, which is BU as per the theory and we retested those levels and now we are heading higher and higher.

So the current phase was the spring and the rally what happened was phase D of the theory and now we have entered the phase E after the retest. So basically, if I just look at the phase E as per the theory, the prices, slow and steady, go higher and higher and the previous lows acts as a huge support zone for the phase E.

So we are expecting this on bitcoin. If you remember, we have done a previous video as well on the bitcoin and I have termed that I am looking at the six digit mark on bitcoin. So yes, my views are still intact on the 6 digit mark for bitcoin. Again in phase E any dip should be a good opportunity to go long.

 

The second if l look at the market wise it's ethereum. If you look at the ethereum chart as well, again since the March 2020 low, if I just draw the trend line, it is forming a higher-high higher-low structure. As per the dow theory it's bullish structure.

After a rally, it consolidated in a narrow range over there if you look at the red lines. It broke out of the range marks, retested those range marks, formed a double bottom over there.

If you look at the green line over here, this is 100 day exponential moving average on the charts, and every time prices test over there, it acts as a support. Once it broke down, formed the bottom formation. It went again higher.

Again, if you look at the recent structure at the red line break out, it formed double bottom right around 100 days exponential moving average. So I believe again, bitcoin and ethereum are showing a positive momentum into the cryptos, and again, these two are the leaders in the crypto world.

So I believe there is still a huge room for bitcoin and all the cryptos. Selecting the cryptos depend upon traders to traders, investors to investors. But I would stick with the larger ones, the bitcoin and ethereum. I believe there is a huge positive room available for these cryptos.

So signing off. Brijesh Bhatia.

Warm regards,

Brijesh Bhatia
Brijesh Bhatia
Research Analyst, Fast Profit Report
Equitymaster Agora Research Private Limited (Research Analyst)

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