Since August 9, tensions between North Korea and the US have intensified, with South Korean dealers piling money into the cryptocurrency of their 2nd largest blockchain network, Ethereum. ETH-USD breached the $300 handle and today finds support at this emotional level; we offer an outlook for the cryptocurrency heading forward.
While markets across the world have shown increased volatility in reaction to this war of words, cryptocurrencies have remained rather stable, incubated from any danger of a war on the Korean peninsula.
US President Trump jeopardized the little, communist country with “Fire and Fury,” while the North Koreans hit back with a warning of a strike on Guam, a US military base, that is the Westernmost edge of their influence from the Pacific. A retired Russian general, however, does not see the US taking the offensive, as North Korea would most likely target Seoul and US assets in retaliation. While the US military is considerably more strong, morale and readiness for battle is suggested to be greater among the military of North Korea. China has also weighed in, saying that an attack on North Korea would not be permitted and it wouldn’t stand by and see. On the flip side, it said its neutrality in case the US is attacked first.
While in times of economic uncertainty, assets such as gold, US Treasuries and the Japanese Yen are desired by investors, cryptocurrencies are beginning to steal the show. While stock indices dropped across the board, this new asset class is rising to prominence, also has shown stronger durability than more recognized safe haven assets at yesteryear. Together with the Cyprus bail-in, Brexit, and now the danger of another war breaking out, cryptocurrencies seem to be cementing their place as a asset to diversify with against geopolitical risk. Envision, if South Korea is caught in the crossfire, since Seoul lies within the artillery range of North Korea, the South Korean Won will be hit hard, whereas the Ethereum network will still be operating, with infrastructure spread across the world.
Ron Chernesky, CEO of InvestFeed, highlighted the use of cryptocurrencies as a hedge against a larger downturn in wider markets:
“We’re seeing investors transferring their funds into cryptocurrencies as they try to diversify their risk in case of a severe downturn in the market. The space has gone from niche to more widely adopted with one of the main draws being that cryptocurrencies are seen as less correlated with other assets.”
As the news about North Korea permeated across the planet, ether enjoyed higher volume, surpassing $2.5 billion on August 9, which has been significantly larger than the volume for the most popular cryptocurrency, bitcoin.
Ether is evidenced by Koreans because Vitalik Buterin chose an attempt to put a face to the cryptocurrency; as a consequence, ether has gained confidence among shareholders in the nation, compared with bitcoin, whose creator remains anonymous. However, not only are investors in the Nation buying often, but they are betting big on the electronic asset, as explained by Bobby Kim, trader and advisor on Bitcoin Seoul:
“When I started buying bitcoin, I noticed a huge difference between the orders in the U.S. and Korea. In the U.S., they trade around $100 up to $5,000 to $10,000 per trade. In Korea, these trade amounts are in $100,000 increments.”
The kids of this “chaebol” conglomerates would be those placing substantial stakes on cryptocurrency, investing their own inherited wealth. The enormous volume growth saw ether increase to a brand new high against the Korean Won, over 363,000. In dollar terms, ETH-USD broke over the 300 manage, peaking at $315.12 on August 9. The purchase price of ether has since retreated into the 300 handle. The graph below reveals that as the news broke about North Korea’s supposed nuclear capacity, volume increased over the Korbit market, that is a market share of approximately 6 per cent of the full ether marketplace. Buyers managed to push ether up from 337,200 into 363,050 within Only a few hours.
ETH-KRW also spiked later in the day as the Pentagon chief threatened the “rogue state” with the destruction of its people, with ether peaking around 351,450 against the Won. For ETH-USD, the cryptopair reached a fresh high at $316.92 in the rising heat of geopolitical tension.
The daily graph for ETH-USD is revealed below and exemplifies that a bullish outlook for its cryptocurrency. We seem to purchase around the top length of this Ichimoku cloud, which offers first support about $269. See that both preceding candlestick have been Doji’s, indicating some indecision on the current market, therefore why we might see ETH-USD escape to discover a new flooring around $270, before continuing greater. The Ichimoku cloud can also be altering colour, from red to green, giving a sign that a new uptrend is penalized, confirmed using a breakout over the Ichimoku on August 6.
Support also lies at the conversion line ($267.24) and the base line ($235.46). Finally, notice that the lagging line has followed the price action, and is currently above the Ichimoku cloud, giving another bullish signal.
The 4-hour price action is displayed below, with a key support at $297.50. A 4-hour close below this level will open up the support provided by the base line, at $288.51. We look to buy if the market dips to this level. On the other hand, a break above the fractal resistance at $312.97 will point to further gains in the days ahead.
If ether manages to sustain above the $300 handle, we should see the bullish run continue, with a viable target at the all-time high above $400, which is the last remaining fractal resistance on the weekly timeframe. Hence, if ETH-USD remains above $271 by August 14, we should see the market take an attempt at $404.98.