Best Pairs to Trade During Chinese New Year Part 2

The Chinese New Year is known for bringing hope and optimism. It is the time of the year when people spend time with their families, wear red clothes, and welcome the spring season. It is interesting how spring holds so much significance in many cultures around the world. There is something about spring bringing luck and prosperity. 

The Chinese New Year is also known for being the driver of the largest annual human migration. Some 2 billion passenger journeys take place over a 40-day period. Going on a holiday, celebrating a festival with family, and being part of such an important annual event tend to have a bearing on the finances of billions of people. People have tried to model this phenomenon by studying the price behaviour in the markets during the Chinese New Year and the period thereafter. For the cryptocurrency markets, there isn’t a lot of data. But, over the past few years, some people have pointed out how the price of Bitcoin dips during Chinese New Year and then goes up during subsequent months.

Cerus Markets does not vouch for any speculation and advises traders to do their own research. However, given the significance of the Chinese New Year, we will cover three pairs that you can trade during this auspicious time of the year. This article is part two of our two-part series on the best pairs to trade during Chinese New Year.

Pair #1 – LTCUSD

LTCUSD is the first pair that we want to discuss. Here, the base currency is Litecoin while the quote currency is the US dollar. Litecoin was designed to overcome the speed and scalability issues faced by Bitcoin. So, in terms of technology and functioning, Litecoin is similar to Bitcoin. However, Litecoin was designed to serve as currency while Bitcoin became more of a store-of-value coin. Litecoin blocks are created four times faster than those of Bitcoin while Litecoin’s processing speed is ten times faster than that of Bitcoin. It is more feasible to frequently transact in Litecoin than Bitcoin and it also appears to have greater liquidity.

In October 2022, Moneygram announced that it will allow users to hold and transact in Litecoin. This was a tailwind for the cryptocurrency that positioned it well for a breakout. However, the FTX collapse was a headwind for the entire crypto market that also affected Litecoin. Meanwhile, Litecoin is expected to undergo halving in July 2023. Therefore, a pre-halving rally could also be in play.

(weekly chart for LTCUSD source: Cerus Markets) 

A quick look at the weekly chart for Litecoin shows a base forming near the bottom after a sustained downtrend. Such a base could result in a reversal. Any breakout above $92 would be interesting for a long trade. The use of the weekly chart generally signifies a longer duration trade. So, positional traders will find this sort of setup worth tracking.

Pair #2 – ETHUSD

Ethereum is the second most valuable cryptocurrency by market capitalization. It was the first “altcoin” after Bitcoin burst onto the scene. ETHUSD is the most commonly traded Ethereum pair. In this pair, ETH is the base currency and the US dollar is the quote currency.

A cryptocurrency trader cannot ignore Ethereum because it is the leading network for creating decentralized apps or dApps. It allows developers and programmers to build their apps and smart contracts. If Bitcoin is like digital gold that can be used to store value, then Ethereum is like an operating system. It allows users to build apps just like Android or iOS does. Ethereum even allows users to lend money to each other (P2P lending) without going through a bank.

At Cerus Markets, users can trade ETHUSD CFDs with a leverage ratio as high as 100:1. Recently, Ethereum enjoyed a strong rally over the first few days of January 2023. However, the overall trend for the past year-and-a-half has been downwards with lower highs and lower lows. The price, as of January 2023, is about a third of the peak price of almost $4900 hit in November 2021.

(15-min chart of ETHUSD  source: Cerus Markets)

There could be a short-term trading opportunity over Chinese New Year or a few days after the festival. The price range has compressed a great deal and a breakout or breakdown could happen within a few days. One may want to keep a track of ETHUSD to identify a trigger, whether it is a candlestick pattern or an indicator-based signal.

Pair #3 – BTCEUR

If you are wondering why we are only sticking to the big market capitalization cryptocurrencies like BTC and ETH, then one answer is liquidity. Because BTC, LTC, ETH, and XRP are commonly traded, there is actually a buyer on the other end when you want to sell. Our third pair for this article is BTCEUR. The base currency is Bitcoin and the quote currency is EUR. The Euro is a major currency in the world and there is plenty happening in Europe as well due to the war in Ukraine. Therefore, it may be a good idea to pay closer attention to the BTCEUR price action.

The EU is facing significant challenges in terms of inflation and energy prices. Many economists and commentators are not very bullish about the region, at least for the year 2023. There is a chance that EU-related instruments could face relatively higher volatility. The 5-min chart for BTCEUR could offer intraday traders an interesting opportunity.

(5-min chart of BTCEUR  source: Cerus Markets)

The price has been somewhat rangebound. A breakout or breakdown could offer a decent risk-reward ratio for a short-term trade.

Any New Year, including Chinese New Year, is an exciting time to invest. The Chinese New Year signifies a new beginning and brings optimism about the time that lies ahead. Starting your cryptocurrency trading journey is something that you may want to consider as the Year of the Rabbit begins. Open an account with Cerus Markets to avail the ongoing 100% welcome bonus offer for new sign-ups. We wish you wealth and prosperity for the new year!

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