Apparently, Christmas has come a week early for the crypto market! More festive green across the trading screens as Bitcoin (BTC) breaks above resistance at $3,630 and Ethereum (ETH) climbs back above $100. Short-covering appears to be the main catalyst, with BTC now up more than 20% from its recent lows. In fact certain market participants have been quite open about buying back short positions. Mark Dow, a former IMF economist who now runs a family office in the US, tweeted that he had said ‘goodbye’ to the Bitcoin short established earlier in the year. Based on the price action this week, he is probably not alone. So is this a change of sentiment or just some year end profit taking from those that have been positioned correctly for the year-long slide? Too early to make that call, but for now at least, momentum has turned.
Going to turn attention to Ripple (XRP) today. Regular readers of my commentary will have seen me remark on several occasions, how XRP has outperformed other major coins over the past few months. While ‘cross’ plays are the norm in the FX markets, in crypto trading USD plays still appear to be the trade of choice. And just like the rest of the crypto market, XRP has suffered against the USD. However, it is now showing signs of life and has broken back above some key levels as you can see from the chart below. Major support between 0.2450 and 0.2525 was never properly tested and we have since broken back above 0.3100, which had previously been strong support. Major resistance now comes in between 0.3900 and 0.4000, having stalled earlier today around 0.3940. Break through there and the topside could open up nicely for a move to 0.5000. Any retracement now needs to stop short of 0.3100.