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A Crackdown Makes you Stronger

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When trying to determine the value of any asset, most investors listen very closely to what people think about the asset in question.

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For example, in the crypto market, John McAfee, famous for creating the McAfee antivirus in 1987, likens himself to a virtual G-d, and is able to conjure up price action on any specific cryptocurrency he chooses with a single tweet.

Today, the cryptomarket is reeling over the latest prediction from the most famous investor on the planet, Warren Buffett, who believes that all cryptocurrencies will end badly.

He added that he would not take a short position on bitcoin futures but expressed that over 5 years he believes the market will fall. What stuck out for me is when he admitted that he did not understand bitcoin or blockchain. Well, that makes sense.

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As with Buffett, the CEO of Goldman Sachs Lloyd Blankfein says that he frequently does not understand new technologies and many times misses these type of trends. About a week after Lloyd’s statement Goldman announced that they would in fact be offering bitcoin futures to their customers.

The Dean of Valuation at New York University responded by saying that Buffett’s comments painted the entire industry with too broad a brush stroke. In fact, there are thousands of cryptocurrencies in circulation at the moment and to say that none of them have a future just doesn’t make much sense.

On Tuesday, the CEO of JP Morgan admitted that he regrets calling Bitcoin a fraud. So I’m sure the Oracle of Omaha will come around too he just needs a bit more time and exposure. I am a firm believer in the fact that it is possible to teach an old dog new tricks.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Bond Bearings

Watch Oil Closely!

South Korea Crypto Ban?

Please note: All data, figures & graphs are valid as of January 11th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

The weakness in the bonds markets that we noted yesterday does seem to be impacting the markets by now. The awesome momentum that we’ve been seeing in the stock market so far this year seems to have been restrained and Wall Street closed yesterday with some minor losses.

Legendary Bond investor Bill Gross seems to think that the action we saw so far is just the beginning and we may well see further selling in this increasingly volatile market.

We should also be watching the price of Crude Oil very closely at this point. The technical pattern on the chart indicates that we might be in for a breakout above $63.50.

The stabilization of oil prices has been a core factor contributing to the record low volatility in the stock markets over the last year. So now that it’s testing new ranges the markets may need to make some readjustments going forward.

Also, we await a critical decision from the Trump administration regarding Iran’s nuclear program and connected sanctions. Trump is no friend of Khamenei or Rouhani and is certainly not pleased with the harsh crackdown on the recent protest movements. So we’ll need to see what he’s got in mind.

Of course, most of you are probably interested in an entirely different crackdown that’s happening elsewhere at the moment…

South Korean Crypto Ban

The latest decline in cryptocurrencies is being fueled by updates from South Korea. As we know, SK is the biggest cryptotrading nation on the planet so reports that the government may be preparing to ban cryptocurrency activity in the country is likely bringing things down a bit.

Recently, the government put out a bill that bans anonymous crypto accounts and gives regulators more power over local exchanges. This latest proposal is to squash the entire industry. Yesterday, tax authorities raided a few of the major exchanges including Coinone and Bithumb so the situation on the ground is tense.

The market does seem to be affected here with prices of Bitcoin, Litecoin, Dash, and Ripple all down today. Ethereum remains the only safe haven both because of it’s establishment of a network but also because exposure in South Korea seems to be lighter in comparison to other cryptos.

However, even though the Justice Ministry is doing their best to push this proposal through, it still would need to pass a vote in parliament.

Given the popularity and extreme exposure of her citizens, it’s difficult to imagine the government actually passing such a law. Still, it is a possibility that’s on the table so caution is advised.

No matter what happens, just remember that China was dominating the market a year ago with 90% of the volumes coming from Chinese exchanges. The heavy hand of the People’s Bank of China did cause the markets to dip but they have since recovered. As the German Philosopher famously said, “whatever doesn’t kill you, makes you stronger.”

As always, let me know if you have any questions, comments, or any other feedback. I’m always glad to hear it. Come tag me on eToro or on Twitter any time.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Long-Term Cryptocurrency Analysis: Correction Deepens but Leaders Remain Stable

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As the major cryptocurrencies got hit hard this week, losing around 20% on average, the long-term picture in the segment got close to an entry point for investors. The overbought readings that developed during the late-April rally are now cleared and although the short-term trends are still clearly negative, we still expect the coins to resume the recovery. With that in mind, long-term investors could start accumulating the relatively stronger coins.

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On a negative note, even the leaders violated key support levels during this week’s selloff, but the secular long-term trends are not yet in danger. The prior leaders Ethereum, EOS, and IOTA are still in the center of attention, as we expect them to form a bottom soon. Bitcoin and the other relatively weak coins, like Litecoin, Monero, Dash, and NEO are still lagging the form a technical perspective, but they are also well above the support levels that would indicate an end of the secular bull market.

BTC/USD, Daily Chart Analysis

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Bitcoin is below the key $7650-$7800 support level and it remains the biggest drag on the market, despite a brief period of relative strength this week. The upper boundary of the base pattern that we identified in April is found near $6150, with a weaker zone around $6500, and with the short-term trend clearly being negative, the latter might be tested before a bottom forms. Further resistance is ahead at $8400, $8700, and between $9000 and $9200, and traders and investors still shouldn’t enter positions here.

ETH/USD, Daily Chart Analysis

Ethereum is testing the $555-$575 support zone after violating the $625-$645 range, with the declining short-term pattern being intact. A bottom near the $500 would still keep the recovery intact, but the correction low might already be in, and investors could already add to their holdings here. Further resistance zones are ahead between $735 and $780 and near $845, while support is found near $450.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 257 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Bitcoin

John McAfee Just Made Some Bold Predictions for Bitcoin, Bitcoin Private

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Technologist and crypto bull John McAfee has made a series of eyebrow-raising predictions concerning bitcoin and bitcoin private. While McAfee is no stranger to gutsy calls, his new forecast sees bitcoin prices doubling in a matter of weeks. And yes, the forecast came after the Wednesday price collapse.

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McAfee Raises the Stakes on Bullish Bets

In a Thursday tweet, McAfee predicted the market will “turn” before June 12, which was the original date of the planned summit between U.S. President Donald Trump and Kim Jong-un of North Korea. McAfee’s algorithm expects a Korea deal to get signed on that day even as Trump signaled on Thursday for the cancellation of the meeting.

According to the post, McAfee expects bitcoin to surpass $15,000 in June before dipping again in July. Bitcoin bottomed below $7,300 on Thursday. It was last seen trading at $7,563.

Bitcoin private, the so-called meta currency that ‘merge-forked’ from bitcoin and Zclassic, is expected to hit $200  by the end of July. At the time of writing, BTCP was trading at $25.61, having gained more than 33% over the past 24 hours.

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BTCP entered circulation in early March as a fork from Zclassic, which itself forked from bitcoin. Bitcoin private is therefore seen as a ‘fork of a fork of a fork.’

McAfee also expects EOS to jump to $32 by the end of July from its current level of $12.48. EOS has skyrocketed to the No. 5 spot on the market cap rankings with a total value of $11 billion.

Institutional Demand

Earlier this week, McAfee heralded the arrival of institutional money to the cryptocurrency market, arguing that it will spark the next leg of the rally.

“Institutional investors are preparing to enter the cryptocurrency market with a vengeance” he tweeted Monday. “They are generally long term investors and will be pumping billions into the market. Expect the top ten coins to go through the roof fairly quickly. The bulk of alt coins will soon follow.”

Digital currency exchange Coinbase has expressed the same opinion and has launched a suite of products to ease institutional money’s transition to crypto.

Crypto analyst Tom Lee has also appealed to institutional demand to justify his bullish outlook on bitcoin in the face of multiple declines. In a recent interview with CNBC, Lee said institutional interest in crypto has only just begun and that demand will continue to grow once regulatory uncertainties are ironed out.

Lee maintains a price target of $25,000 for bitcoin.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 415 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Bitcoin

Bitcoin’s Plunge Has Not Shaken Tom Lee

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Bitcoin’s latest technical breakdown hasn’t affected Tom Lee’s bullish outlook on the digital currency. The head of research at Fundstrat Global Advisors is standing by his target of $25,000 by year’s end.

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Typical Volatility

In an email conversation with CNBC, Lee said the latest drop in market prices can be attributed to “typical market volatility” rather than any new underlying risks facing digital assets. He also identified three factors that will lead bitcoin to $25,000.

The first factor is cost of production, which Lee identified as anywhere between $6,000 and $8,000 during the most recent slide. This means bitcoin is still worth more than its cost of production.

Growing interest from institutional traders will also keep the market rallying for the foreseeable future. Banks and other financial institutions are still feeling their way into the crypto market and are looking for regulatory guidance on how to move forward.

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In a Tuesday interview with CNBC’s “Futures Now,” Lee issued the following statement:

“I think institutional investors have gained a lot of interest, and they haven’t really come into crypto yet because there is still some regulatory uncertainty. But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why bitcoin rallies.”

Lee also reminded investors just how quickly the crypto market can change. A historical analysis reveals that the entirety of bitcoin’s gains in any given year can be attributed to ten days. Without those days, bitcoin values are down 25% annually.

“So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days,” he said.

BTC/USD Price Levels

Bitcoin prices bottomed at $7,289.35 on Thursday, their lowest in about six weeks. The cryptocurrency has declined nearly 10% over the past week.

At last check, BTC/USD had recovered around $7,508 for a total market cap of $128.3 billion. Selling pressure brought more volume to the market, with total turnover in bitcoin approaching $7 billion.

With the latest skid, bitcoin is down more than 40% this year.

The market cap for all cryptocurrencies bottomed at $318.8 billion on Thursday but has since recovered to around $333 billion. The market is down nearly $60 billion from its Sunday high.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 415 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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