The risk on Bitcoin is to the downside

We warned on November 5 about the downside risk on Bitcoin when it was at $7,500 and got it right as expected from the daily and weekly extreme overbought conditions.

Similar extreme conditions are also present on the monthly time frame and the longer they are maintained without any significant consolidation the higher the risk is mounting. At some point the pressure that has built up will have to be released and for this reason we would like to recommend investors to refrain from entering long Bitcoin at this level.

We envision the possibility for a deep correction over multiple months for a deep in the $3,000 price area.

Bitcoin Monthly Price Chart


Ripple seems like it is going to outperform Bitcoin

On the opposite the technical set-up for the Ripple-to-Bitcoin price ratio shows bullish pressure building up. The 5-month decline of the ratio should now be coming to an end and conditions for a major upside reversal have developed. We expect Ripple to significantly outperform Bitcoin in the coming months.


Ripple to Bitcoin price ratio on weekly price scale


Ripple should be ripping higher

Out-performance DOES NOT MEAN positive performance so the risk for the price of Ripple to decline still exists, and this could happen if it were to break below the $0.18 level.

There is a rare event of volatility compression on the daily price chart (inserted chart with purple frame) similar to the one visible on the bottom left of the chart here below and that preceded the major move from $0.03 to $0.4.

Any move out of this compression area should be substantial and if Ripple holds the $0.18 price level then it should rip into the previous $0.3 resistance level and a break above this level will bring the price to the historical price record of $0.4.


Ripple Daily Price Chart


It looks like a good idea to buy Ripple at the present price level and to accept the risk of around 15% loss (from $0.21 to $0.18) for a minimum profit of close to 50% (first target at $0.3) or 100% (second target at $0.4).

If this bullish scenario develops Ripple should eventually take out its historical price record and therefore a buy-and-hold strategy could also apply.