Dash Price Analysis — the Bull is weak

DASH, formerly known as Darkcoin, was launched by Evan Duffield in January 2014. The Darkcoin name was dropped due to an invariable association to unsavoury darkweb activity. DASH is currently the 12th largest crypto by market cap ($2.9B) and is currently trading at US$360.63.

Along with Zcash and Monero, DASH is part of a small competing subgroup of so called ‘Privacy’ Tokens, that seek to offer greater user security comparative to Bitcoin. Its unique selling point is the privacy, speed and cost efficiency of transactions on its network.

Volumes and exchanges

There are currently 8,085,547 DASH tokens in circulation, with 24 hour trading volume at US$78 million. The pairs generating the most volume were crypto-to-crypto with Bitcoin(BTC) and Tether(USDT) being the most popular partners with DASH, the most popular fiat currency pair is USD. By far the most popular exchange for trading DASH is Chinese crypto-to-crypto focused ZB.com which accounted for 54% of the flow of DASH, the next most popular exchange is Hong Kong registered HitBTC, followed by Yobits, Exrate and Binance.

Dash Volume 1

A key transactionary feature of DASH that sets it apart from other privacy tokens, is its PrivateSend option. PrivateSend is somewhat analogous to coin-mixing and involves jumbling multiple identical inputs from users into a single transaction with several outputs.

DASH runs this system as a two-tiered structure by implementing Masternodes at the top, acting as facilitators of every PrivateSend transaction and performing all high-level functions on the network. The Masternodes are users (computers) that are given their privileges and responsibilities once they have crossed a collateral level set at 1000 Dash.

DASH also offers a unique block reward system. Unlike Bitcoin where miners earn 100% of the reward for every block created, DASH offers a 45/45/10 reward cascade with miners earning 45%, masternodes earning 45% and 10% going to the DASH treasury.

Price trends

Pricewise 2017 was a bumper year for DASH — peaking at US$1500 on December 21st. In an interview with Coinvest, CEO Ryan Taylor attributed the year’s success to significant upgrades (versions 12.1 and 12.2) that improved back-end protocols, governance, voting and the token’s privacy function.

The version 12.2 upgrade launched on November 8th — coinciding with a relatively strong period of price rises which saw the DASH price increase by 450% in six weeks. The update significantly reduced transaction costs and doubled the block size to 2mb — allowing for more on-chain creation.  While the update was an important step in DASH positioning itself as the ‘payment network of tomorrow’, the reasons for DASH’s recent price fluctuations over the last year are likely more straightforward.

BNC DASH 1 Year Index 230518

Figure 1: DASH 12 month index price 

 

BNC BTC 1 Year Index 230518

 

Figure 2: Bitcoin 12 month index price

The price patterns of Bitcoin and DASH over the last year show striking similarities. Any noteworthy fluctuations occur at virtually the same points and broadly, it appears that Bitcoin is the biggest driver of the price of DASH. For enthusiasts, the differences between governance, leadership and network capacity have been critical criteria when deciding which of the two tokens to buy, but at a wider market level, the two coins have offered very similar returns.

This pattern is somewhat unsurprising given that DASH was designed based on Bitcoin’s core code. It seems only natural that its fortunes would be tied to market perspectives of BTC. However, as the market matures, DASH, along with other alt-coins, will continue to distinguish themselves to buyers by rolling out more features and aligning themselves into their respective product models.

New technology

For DASH this alignment will revolve around protecting user privacy, and offering faster, cheaper transactions — something Bitcoin has struggled to deliver given its scalability issues. Using a retail-focused marketing strategy DASH is also positioning itself as being a more mainstream crypto option — and setting itself apart from its direct rivals Monero and Zcash.

To this end DASH’s big launch in 2018 has been its new digital payment system, DASH Evolution. The launch has been well received by writers at Steemit and Medium, who have described it as a potential ‘paypal killer’.One of the stand out features of Evolution is its user-friendliness and accessibility. It looks and feels like a modern digital payment platform with an easy-to-look-at user interface and features like a Friends list and an App store.

Dash Dashboard

 

The new system utilizes the existing PrivateSend feature to maintain security and interestingly, does away with the eyesore of cryptographic addresses by using a reusable username system. Overall, the DASH Evolution project represents a progressive, differentiating step for the network, effectively targeted at ‘consumer’ users as opposed to crypto enthusiasts.

Regulation

For privacy-focused tokens such as DASH and Monero, the question of what regulators make of the potential associated security risks is important. Recently, for example, Japanese regulators have pushed local exchanges to drop Monero, DASH and Zcash due to fears of potential ties with the digital black market.

Monero may be the primary focus in a number of these crackdowns but an overly conservative view taken by governments towards cryptographic currencies may affect all privacy coins because of their natural compatibility with the digital  underground.

For the dev teams, staying on the right side of the law will mean striking just the right balance between delivering on the market demand for tokens that provide high-level privacy, and not crossing the line with regulators concerned about concealed transactions.

On the flipside of this, authorities also want to see distributed ledger technology take steps to prevent hackers from easily accessing user data. Given the recent NEM hacks at Coincheck, which was a trigger for the recent regulation clampdown in Japan, DASH’s focus on protecting private user information with its PrivateSend feature may actually sit well with Japanese and other major government authorities.

Community  

The DASH community is positively engaged and active on spaces like bitcointalk forums. Its own forums appear to be well moderated and responsive and it appears to have gained traction by employing a strong female presence, Amanda Johnson, as its public face. Overall DASH has cultivated a ‘nice guy’ image which is helping it secure a loyal following who see it as an alternate network without the infighting commonplace with larger coins like BTC. 

From a marketing perspective Dash is known for its professional execution. The relatively high price of Dash, as well as its Treasury based reward system, has meant that Dash has been able to deploy an effective multichannel marketing strategy. The internal Dash blog is very active and Dash also hosts its own podcast and a well produced weekly news show.

Beyond this, there are also useful Dash -produced tutorials on features like PrivateSend and Masternodes to help ease in casuals who are intimidated by some of the more complicated terms surrounding DASH’s blockchain architecture.  

Technical Analysis

DASH along with the entire crypto market experienced dramatic losses during Q1 2018. However, since the supposed ‘end of US tax season’ market bottom, DASH’s price consolidated, then rose ~89%, and has since experienced a pullback, and now sits up only ~22% from consolidated bottom. We will use several technical analysis tools to determine if the bearish trend persists or a new bull trend has emerged.

The tools used are:

  • Exponential Moving Averages (EMA) with Volume Trends

  • Support and Resistance Levels with Price Channel Breakouts

  • Fibonacci Retracement Levels with Slow Wave Trend Oscillator

  • Ichimoku Clouds with Slow Wave Trend Oscillator

Exponential Moving Averages (EMA) with Volume Trends

On the daily chart, the bullish EMA recross, or Golden Cross, using the 50/200 day EMA, has yet to occur which is bearish. In general, EMA crosses lag market movements, which makes this indicator less reliable for spotting market inflection points. An additional point of interest is the declining volume trends which are the result of the 2018 bear market. If the market has found a bottom, we will expect volume to begin increasing, which has yet to occur consistently across all exchanges.

 DASH1

Support and resistance levels with price channel breakouts

On the daily chart, price recently broke out of the 2018 downtrend. A short term bottom was found at ~$290 which initiated an ascending price channel breakout that stalled at ~$528. Price has since found solid support at ~$385 and consolidated. The breakout range to watch is $434 and $358 (blue lines). If price breaks out positively, we would expect a similar price channel to form with an eventual retest of the $528, $617, and $728 resistance levels over the coming months.

dash2

Fibonacci retracement levels with slow wave trend oscillator

On the daily chart and assuming the recent bottom at ~$290 is real, Fibonacci Retracement levels show potential price targets of $541 (0.786), $743 (0.618), and $885 (0.50) over the coming months.

 dash3

Further strengthening this assumption, the Slow Wave Trend Oscillator shows that the current pullback from the ~89% up move is approaching oversold territory, i.e. a bullish cross. In addition, on the 4 hour chart, the current pullback has consolidated at 0.618 retracement level and has bounced off this key support level four times. The aforementioned elements may give rise to a new upward price movement that will retest $432, $541(0.786), and $743 (0.618).

 dash9

Ichimoku Clouds with Slow Wave Trend Oscillator

The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B). The status of the current Cloud metrics on the daily time frame with singled settings (10/30/60/30) for quicker signals are mixed; price is in Cloud, Cloud is slightly bullish, the TK cross is bearish, and the Lagging Span is below Cloud and price.

A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout. Price attempted to break above the Cloud but failed at the Senkou B resistance and currently sits at the Senkou A support. Additionally, price is still within the cloud and the TK cross remains bearish. However, the positive news is that the Kumo is narrowing and slightly bullish, and the Slow Wave Trend Oscillator is nearing a bullish cross. The key breakout level to watch is ~$464, the flat resistance level of the Kumo.

dash5

The status of the current Cloud metrics on the daily time frame with doubled settings (20/60/120/30) for more accurate signals is bearish; price is below Cloud, Cloud is bearish, TK cross is bullish, and the Lagging Span is below Cloud and price.

Again, a traditional Cloud long entry signal should not occur until price is above the Cloud with volume. It is likely that price will attempt to move higher given the pending bullish cross of the Slow Wave Trend Oscillator and support levels. The flat levels should attract price, so the key levels to watch for are the Senkou resistance of $445 before price enters the Cloud, and $617, $704, and $763 once price enters the Cloud.

dash8

Conclusion

DASH is much more than just another privacy coin. It has a committed evangelical community and a clear marketing strategy, which is executing well —  that appears to be aimed at setting it up for syndication by a number of payment platforms. The issue with DASH, however, as is the case with many alt-coins, is the lack of tangible use-cases.

Currently, two of its bigger partnerships are with Alt36, as part of cannabis supply chain solutions in the US, and Kuvacash, a Zimbabwean fintech firm that uses DASH as a backend currency to protect users from inflation. While both are unique and exciting, neither these or any of DASH's other facilitation projects appear to have been factors in its price — the ups and downs of which appear to be more closely tied to movements in the bitcoin price than anything else.

Big announcements regarding tie-ins and contracts using DASH may be just around the corner, particularly given its significant presence at the Consensus conference,  but until DASH is more widely adopted and locks up some major league partnerships it will always be more of a story of what it could be rather than what it is.

DASH technicals are currently mixed and bearish. At best they suggest that the current bear market has halted for the time-being and has been replaced with a weak bull trend. The prudent trader would wait to see if price successfully executes a bullish Kumo breakout before entering a long position.

More adventurous traders may look at current support and Fibonacci levels, Slow Wave Trend Oscillator, and narrowing / bullish Cloud (10/30/60/30) as a ‘good enough’ entry point. In that case, those traders should expect an immediate retest of $445 with longer-term price targets of $530, $617, and $740 over the coming months as price attempts to breakthrough the Cloud. If price fails the $445 retest, then lower price targets of $340, $280, and $245 are all likely over the same time span.

Disclaimer: This analysis has been designed for informational and educational purposes only. Readers are advised to conduct their own independent research into individual assets before making a purchase decision.

About the authors


BNC Christopher Brookins headshot pic4Christopher Brookins
Christopher Brookins is the founder and CEO of Pugilist Ventures, a quantitative investment firm focused on digital assets and blockchain technology. Chris has a deep knowledge and unique perspective on digital assets formed by his polymath experience in equity trading, credit investing, and business development at two West Coast startups (one acquired). He has been involved in the blockchain community since 2014. 

 

Aditya Author Profile

Aditya Das
Aditya Das is Brave New Coin's in-house market analyst. Raised in Dubai, UAE, he holds a post-graduate honors degree in Economics from the University of Auckland and a BA in Economics  from the University of Sussex. Prior to joining BNC his most recent roles were as a researcher and Economics tutor at the University of Auckland.