Volatile Week for Cryptocurrencies

FXOpen

It’s been a volatile week for cryptocurrencies. Bitcoin first crashed below the $400 handle, hitting a low of $349 dollars on Saturday. This prompted both Peercoin and Namecoin to reverse their rallies and head lower. But in the next few days a sharp retracement started, bringing BTC/USD back above the $400 round level. We are currently quoted at $416 dollars per coin. The knock-on effect on PPC and NMC saw their losses reversed as well, whipsawing trend-following traders again.

Peercoin Reverses Trend on Bitcoin

As noted above, prompted by Bitcoin, Peercoin reversed its uptrend and headed lower. We mentioned that this was a possibility in our previous PPC article. The surge higher in prices wasn’t broad-based and the two major cryptocurrencies Bitcoin and Litecoin were flat during that rally.

PPCUSDH4-jan21

The fall below the 39 cents level meant the technical start of a new downtrend. Peercoin initially fell further to a low of $0.353 but soon after these losses were reversed by Bitcoin’s surge yesterday. While an end to the downtrend requires a break above 50 cents, the strong bounce should worry the bears. If you have no position it may be best to adopt a ”wait and see” approach. A break of the $0.353 low should renew the downward momentum in prices. Support on the way down can be found near $0.333 and $0.321 dollars per coin. This is followed by a stronger support area from $0.29 to the round 30 cents level.

Namecoin Swings Around

Namecoin swung around widely on bitcoin’s moves. Similarly to what we saw with PPC, prices first crashed on Saturday, only to rally on Wednesday and reverse all the losses. The downtrend is still in place, the bulls will need to break the $0.48 swing high to definitively put a stop to the losses.

NMCUSDDaily-jan21

But as with Peercoin, waiting for the market to show its hard may be the best course of action in these volatile times. The sharp retracement during the past two days killed Namecoin’s downward momentum. To resume it, prices will need to decisively break the Saturday low at $0.357 dollars. Support below here can be found at the double bottom near $0.332 dollars. A break below here could intensify the losses and open the door to the August 2015 low at $0.306 dollars.

Important Bitcoin Levels

Both Peercoin and Namecoin are highly influenced by Bitcoin prices, so let’s take a look at some of the important BTC levels as well. Bitcoin’s downtrend is still not broken. We will need to see a decisive breakout above $450 dollars to call an end to the recent down move. But yesterday’s surge higher probably changed short-term sentiment. For a resumption of the momentum lower, we may need to see a break below the $374 dollars figure.

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*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules respectively. They are not available for trading by Retail clients.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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