Monthly Cryptocurrency Market Update; Consolidation Is In Effect

The Cryptocurrency Market Is Consolidating

The cryptocurrency market has had an impressive run higher this year. Most coins count their gains in the triple digits and there is reason to believe the run is not over, bigger gains are on the way. There are several drivers for the rally but the one I see as most significant is the halvening. The halvening is when the block reward for a proof-of-work blockchain is cut in half. What that means is that miners earn half as much per coin after the halvening as before it, a situation that increases the value of all tokens of the same variety.

In our case we have not one but two halvenings. The first is with the Litecoin blockchain. Litecoin is arguably the most important Bitcoin fork and set to halve its reward in under 30 days. The target ETA data is August 5, 2019, the block reward will be cut from 25 to 12.5 coins. While the halving doesn’t realistically improve the value of all LTCs equally, it does make the market less liquid and encourages hoarding of coins. That is what will make the value of LTC increase. As tokens become scarce and the market expands the supply/demand imbalance will underpin long-term price gains. And there will be another halvening in 840,000 blocks, and then another, and another.

The price of Litecoin has been one of this years biggest movers. The coin has risen 545% from the low to the recent high and could easily double itself again. The coin has broken above a key resistance on strong volume, held the level for over a month and consolidated at a new support. Price action is below the short-term moving average which is something I don’t like but that is offset by indications of support in the MACD and stochastic. Both the indicators are set up to fire a rebound/reversal signal, the catch is that they’re still bearish and could lead the coin down to the stronger support level. Support looks to be near $120, it might actually be closer to $106. In either event, a bounce from support is the signal to buy.

Bitcoin’s halvening is a little further off, just over 300 days, but an equally strong mover of prices. In fact, once the general market rally fueled by LTC’s halvening cools off the BTC rally will be ready to begin. When Bitcoin halves its reward will fall to only 6.25 coins and is not the first time to happen. Bitcoin’s price is consolidating around the $11,000 level but may retest the $10,200 region before moving higher. The good news is that indicators are much less bearish, stochastic is weakly bullish, and suggest the next phase of the rally is close at hand. The token needs to cross the $12,000 resistance level, when it does a retest of $14,000 will be next. When that breaks Bitcoin is likely to hit $15,000 very quickly and $20,000 soon after