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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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4.6 stars on average, based on 32 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Technical Analysis: Altcoins Lead Markets Lower as Bitcoin Still Looks Strong

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All of the largest digital currencies are in the red today, following heavy overnight selling, a bounce in European trading, and another round of losses around the US market open. Ethereum is still in the worst short-term shape among the giants of the segment, and that’s in line with the slightly delayed cycle of the coin that we have been monitoring.

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The technical divergence between the leaders of the market and the laggards yesterday is still dominant with the 6 coins that spearhead the rally, BTC, LTC, NEO, Dash, Monero, and ETC, are still in much more bullish setups than the rest of the majors.

Bitcoin is also well below its recent rally highs after breaking down under the key $11,300 level, and a test of the $10,000 support now looks likely, while a move to the $9000-$9200 zone would still keep the rising trend intact.


BTC/USD, 4-Hour Chart Analysis

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The overbought short-term momentum readings are being cleared, and despite the slightly bearish volume patterns, we expect the coin to continue its new bullish cycle after the correction, with targets above $11,300 ahead at $13,000 and $14,250.

ETH/USD, 4-Hour Chart Analysis

Ethereum is now trading below the key $845 level as the correction continues, as we expected, and the coin remains stuck in the dominant declining trend, for now. We still expect a breakout in the coming weeks, but a test of the $740 level is possible before another rally. Further support below that is at $625 and $575 and we don’t expect a new low in the coin, so investors could still accumulate the coin near the main levels.

(more…)

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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4.7 stars on average, based on 105 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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Analysis

Crypto Update: Monero Tests Rally High as Majors Pull Back

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The segment had a bearish Asian session, as a wave of selling hit the major coins following the US close that carried the market more than 5% lower. The still present short-term overbought readings that we noted yesterday likely played a part in the move, as the strong post-crash rally made the market slightly stretched.

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As the coins followed stocks lower during the volatility-driven crash two weeks ago, yesterday’s late-day decline on Wall Street might also have driven the dip in the segment. Amid the decline, several coins are showing relative strength, most notably Monero and Dash, which already have been in encouraging setups.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin is hovering around the $11,000 level today in European trading, with the $11,300 support/resistance level being in focus. The short-term momentum indicators still not reached neutral territory and that might mean that further consolidation is ahead for the most valuable currency. Support below is found at $10,000 and between $9000 and $9200, while resistance is still ahead at $13,000.

Monero remains one of the strongest candidates for another leg higher in the coming days, as the coin quickly recovered from the overnight sell-off and it is still trading back in the short-term consolidation pattern, below the $335 resistance that it tested already today. With the coin clearly being in an uptrend, a rally towards $400 is likely in the coming weeks, while support levels are at $300, $280, and $240.

XMR/USDT, 4-Hour Chart Analysis

Losses Across the Board among Altcoins

DASH/USD, 4-Hour Chart Analysis

Not surprisingly, Litecoin, NEO, and Dash continue to outperform the broader market from a technical perspective, as correlations remain muted, still pointing to an intact short-term uptrend. ETC, the early leader of the rally is also holding up above the previous consolidation zone, with the $32-$34 zone also providing support for the coin.

Ethereum, Ripple, Bitcoin Cash, Cardano, EOS, and IOTA are still the laggards among the majors, as they continue to trade in the short-term correction that started last week. That said, the price action in the segment is still consistent with a new bullish cycle, and we expect the crucial support levels to hold.

Stay tuned for our detailed technical analysis later on today.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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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4.7 stars on average, based on 105 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

The Rally Continues: Bitcoin Market Cap Bounces Back to $200 Billion

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The past week has seen an incredible rebound for bitcoin, as the world’s largest cryptocurrency has regained 30% of its value to lead the market higher.

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Bitcoin Price Levels

The cryptocurrency advanced sharply Tuesday, hitting a rally high of $11,770.87. It closed the day at $11,698.86, having gained more than 36% over the past five days. The coin was last seen trading around $11,357 for a market cap of $194 billion. The total capitalization briefly crossed $200 billion on Tuesday.

With the latest rally, bitcoin has taken the global cryptocurrency market past $500 billion. In doing so, it has claimed roughly 39.5% of the total market share, up from a low near 32% in January.

Trade volumes have also risen sharply, and as of Tuesday, nearly $10 billion in bitcoin was transacted on global exchanges. Bitfinex, OKEx and Binance saw the largest percentage of the daily transactions.

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The Return of the Bull Market

Bitcoin is benefiting from a myriad of forces that, when combined, point to higher prices for the cryptocurrency. Sentiment has improved markedly after government regulators in the United States and South Korea adopted a friendlier attitudes toward digital assets.

South Korea’s financial regulator recently said the country has no problem with “normal” cryptocurrency trading. The comments mirror earlier statements made by Hong Nam-ki, who heads the Office for Government Policy and Coordination.

“I can assure you that the government has consistently maintained a close and careful approach to market conditions and international trends, keeping all possible means open,” he said in a statement last week.

In the United States, Wyoming recently approved two blockchain bills that could make the state one of the more accepting jurisdictions for cryptocurrency. The first bill, HB 70, defines utility tokens as neither traditional fiat money nor securities, which may give startups more leeway in ICO fundraising. The second bill, HB 19, exempts bitcoin from the 2003 Wyoming Money Transmitter Act.

The Senate has also proposed Bill 111 that would exempt cryptocurrency from taxes. This regulation is intended to boost Wyoming’s digital currency market, which may impact everything from economic growth to job creation. Some analysts have also speculated that the passing of such a bill would set a precedent for other jurisdictions still jostling with formulating cryptocurrency regulation of their own.

As bitcoin climbs above $12,000, investors may feel a greater sense of urgency to enter the market. This so-called “fear of missing out” has been a major driver of cryptocurrencies over the past 12 months.

CNBC “Fast Money” trader Brian Kelly recently recommended to his audience that they purchase March bitcoin futures at $12,000 with a target of $18,000. Based on this recommendation, Kelly anticipates a 50% gain for the cryptocurrency. Futures operated by CBOE and CME Group recently reached their highest levels in three weeks.

Of course, a bull market in bitcoin does not exclude volatility. Bitcoin is expected to remain highly volatile even as capital flows back into the market.

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 157 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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