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Analysis: Coins Decline but Damage Remains Limited

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The slight weakness that started on Monday continued to drag the major coins lower today, with no major bearish news being behind the dip. The sharp rise that followed the recent crash in the segment ran out of steam and the correction is more a technical move. Bitcoin, which has been the leader of the recovery, is still outperforming the rest of the market, with some positive catalysts helping the most valuable cryptocurrency.

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Ethereum has shown strength amid the decline, with the ETH token holding up above the $285 level after a period of relative weakness. That said, the $300 and $330 levels are still ahead as resistance for the coin, but the long-term picture remains constructive.

ETH/USD, 4-Hour Chart Analysis

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Ripple and Monero are also performing better than average, while the rest of the majors are down by around 5% compared to yesterday’s price levels. NEO and IOTA, last week’s leading altcoins are even more in the red today, but they remain positive concerning the long-term setup, just as the still struggling Dash and Litecoin, with Ethereum Classic being the most doubtful major even after last week’s strong showing. Let’s see the detailed short-term analysis.

Bitcoin

BTC/USD, 4-Hour Chart Analysis

Bitcoin bounced lower off the crucial resistance zone near the $4400 level after the relentless rally of the recent days, and the coin fell as low as $4200. Buyers of the currency pushed the price higher several times and BTC refused to test the $4150 support, as a sign of meaningful strength. While the steep uptrend is now broken and more sideways price action is possible short-term, a rally above $4400 is still very likely in the coming week.

Litecoin

LTC/USD, 4-Hour Chart Analysis

Litecoin followed the broader market lower, and although it is still well below the key $56 level, it held up above $51 during today’s dip and volatility remained muted. The coin remains below the rising long-term trendline, and until it shows some relative strength, short-term traders should still avoid opening new positions. Below $51, further suppor is found at $44, while resistance is ahead near $64.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is underperforming the segment, as it is still stuck in the short-term consolidation pattern. The coin is now trading right at the $300 level, and we expect a short-term bottom to form near the current price. The long-term uptrend is clearly intact, and investors could now add to their long-term positions here. Further support is found near $265 while crucial resistance is ahead at $360.

Ripple

XRP/USD, 4-Hour Chart Analysis

XRP barely budged during today’s move lower and the coin is still one of the most promising from a technical perspective among the majors. Ripple held up above the key support zone near the $0.20 level, and a rally above $0.22 is likely in the coming days. Further support levels are still found at $0.18, $0.16, and $0.14, with resistance ahead at $0.26 and $0.30.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic is back among the weaker coins after a brief period of strength, but it’s still holding on above the prior declining trendlines. The MACD is now neutral again, and we still don’t expect another test of the $9 support. That said, short-term traders should wait for confirmation before opening new positions, with the line-in-the-sand level still being at $13.50. Primary support is found near $11, while further resistance is ahead at $16 and $18.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero finally showed relative strength today, as it managed to hold above $85, while still being below the declining trendline that defines the correction. XMR is stuck below the key $100 level, and the coin also faces strong resistance at $125. Key support is at $80 and $68, and we expect the former to limit losses before the end of the current move lower, as the long-term picture is getting more and more encouraging.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO remained the most volatile major as we expected after nearing the $40 resistance and turning lower together with the broader market. The short-term uptrend is in no danger despite the sharp, but more consolidation is likely before the next major move following the more than 100% rally. Support is now found at $30 and $25 while primary resistance is around the $34 and $40 levels.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA found support just above the $0.50 level today, as it continued its short-term correction after last week’s strong performance. The $0.64 resistance and the $0.45-$0.48 support zone are still in focus, and we expect a rally to $0.75 in the coming weeks, with both the short- and long-term picture being positive.

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Analysis

The Crypto Correction: What You Need To Know

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In the short span of about 24 hours prices of cryptocurrencies have fallen like a stone. Investors have either given back or taken losses of sizable amounts. Measuring the one-day drop: bitcoin -21%, Ether -29%, Litecoin -29%.

From its December all time high near $20,000, bitcoin has given back more than $200 billion in value. This amounts to more than 80% of the companies on the New York Stock Exchange or Nasdaq. Even for those who have experience-trading crypto, the events of the last few days can challenge nerves.

What is the right plan of action? Possibly no plan at all, by that I mean sitting tight and doing nothing, could be the best plan. What ever you choose, the first thing to do is to shut down your computer and turn off CNBC. These are all entirely emotion driven groups and right now they are making loud negative headlines reminding us of quotes from JP Morgan CEO Jamie Dimon and Warren Buffett.

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The same sources are painting a dark case today. These are the very same folks that were gaga over crypto last year while prices were rising. Now these sources are quoting Warren Buffett who predicted with a high degree of confidence that cryptocurrencies will have a bad ending.

If you listen to Christopher Harvey, Head of Equity Strategy at Wells Fargo, you get an even more dire prediction. He recently appeared on CNBC stating that the cryptocurrency price correction could spill over into the overall stock market.

There is a rule of thumb on Wall Street. If you are right 51% of the time, you are considered an investment genius. This means most opinions are wrong at least half of the time. This could be the case with today’s crypto naysayers.

Prices And Business Fundamentals Don’t Always Match

The number of true experts in cryptocurrencies is small relative to the number of investors. That means there is more emotion than usual driving prices in both directions. It is this volatility that keeps certain investors on the sidelines.

But if you have done your research and have a view of the world in 2028 short-term volatility is not your enemy. Warren Buffett, the biggest crypto naysayer is a master of long term investing. During the 2008 financial crisis, when the world was close to the brink of financial disaster, Buffett was standing by with billions to loan Goldman Sachs charging an outrageous 10% rate of interest. There is a lesson for us here.

Don’t Get Distracted By Short Term Issues

Korea is a big market for crypto demand and, along with China has produced headlines threatening to close down cryptocurrency exchanges. I have not dealt directly with any of these so the analysis of others is necessary.

These folks point out the excessive price premiums as evidence of the behavior of bad actors in the game. So any action by governments to clean up the exchanges could produce a better experience for investors. And let us not forget cryptocurrencies are global. There are plenty of exchanges in the world that make markets.

Korea does not have a monopoly on bad actors. The exchange and lending platform Bitconnect, in recent days, announced that it is closing. The company was recently served with a cease and desist order. Ethereum founders had criticized the exchange for their practices that many believe were bordering on a Bernie Madoff style Ponzi scheme.

The Tipping Point Has Been Reached

The jury is no longer debating the verdict. Cryptocurrencies have become embedded in the global economy. According to Google’s Annual Report on Search Facts, bitcoin and cryptocurrencies were the second most important topic in the world during 2017.

Bitcoin is all about fast, anonymous, low cost movement of money anywhere on the planet. Those lofty goals have not yet been achieved but with tens of thousands of businesses now accepting bitcoin including some hefty Fortune 500 companies and with the Bitcoin Lightning Network coming on, bitcoin’s shortcomings are being addressed.

Bitcoin Futures: Acceptance Is Spreading

When I learned that bitcoin futures would be traded in the US by the CME and CBOE, the only question was how long it would be before other countries recognized the legitimacy of bitcoin futures. Well, it didn’t take long. The Hong Kong securities regulators, SFC issued a report on December 11th giving investors a green light.

Within less than a year futures contracts will be available on Ethereum and possibly others.

Ethereum: The Future Is Here

Ethereum has always had a more obtuse purpose. It was never intended as a medium of exchange like bitcoin. For what it is worth, Ethereum is less likely to be singled out by governments and central banks that fear loss of economic control.

Descriptions like decentralized blockchain platform offering smart contracts and driven by Ether require some time to appreciate. Ethereum is open sourced and applications oriented. You don’t need to understand the technology you only need to envision what it can be applied to.

Ethereum co-founder Steven Nerayoff tells us the number of Ethereum projects today is already ten times the number of last year. Here are just two examples.

Unilever

Unilever, the $52+billion food and packaged goods giant, is working on a blockchain based project to better manage its massive global supply chain. So far it is only being tested but consider the size: 10,000 Malawian tea farmers. And this is just the start of their massive corporate wide supply chain. Imagine what this will look like if Unilever starts to take things seriously: stay tuned.

On The Vanguard

Now the $5 trillion Vanguard group is getting the blockchain bug.  They are the investment industry’s low cost provider. Now they are embarking on test to apply blockchain technology for data sharing.

Caveat Emptor

The reality is the cryptocurrencies are embedded in the global economy and likely to grow dynamically for a long while. This doesn’t protect us from short-term events. That is why huge price corrections are so interesting. The Warren Buffett habit of always having deep cash reserves to pounce on opportunity when frightened investors run is a strategy that has worked well over multiple decades.

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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Analysis

Technical Analysis: Bitcoin Hits First Correction Target as Volatility Reigns Supreme

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The violent correction that created a full-on panic in the cryptocurrency segment continues to unfold in a rather orderly way from a technical standpoint, reflecting the extreme nature of the preceding rally. That said, the percentage losses in some of the coins are huge, and the collapse of Bitconnect accelerated the process, spreading uncertainty among investors, and sentiment quickly got bleak.

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Bitcoin remains in the center of attention, and the most valuable coin finally breached the $10,000 level today, causing another strong wave of liquidation in the majors, that could be the base of a more durable bottom, and a consolidation in the coming days after the crazy last couple of days.

The coin is now oversold from a short-term perspective, and although further losses are likely before the end of the cycle, given the still only neutral long-term momentum readings, a counter-trend move is possible in the coming days. Below, $9000, strong support levels are still found at $8200 and near $7650.

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BTC/USD, 4-Hour Chart Analysis

Altcoins got slaughtered in the two-day crash with Ripple leading the way lower, while Ethereum also lost its relative strength amid the broad sell-off and its recent trendline break. ETH got close to the next major support level at $740 during today’s move, and as the short-term momentum is now oversold, a bounce to the zone around $1000 could be ahead. We still expect the correction to continue in the token, as the long-term momentum remains overbought, with key support at $625 and near $575.

ETH/USD, 4-Hour Chart Analysis

Ripple fell as low as the $0.85 support level during the crash, and although the coin rebounded above $1 afterward, it remains 70% off its recent all-time highs. Long-term investors could already accumulate small positions on the short-term sell-offs, although the correction will likely continue, and a prolonged consolidation phase might also be ahead. Key support levels are now found at $0.85 and $0.68, while resistance is ahead at $1.25.

XRP/USDT, 4-Hour Chart Analysis

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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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Analysis

Market Update: Bitcoin at $10,000, Ripple at $1, Ethereum below $1000 as Carnage Continues

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Yesterday’s China induced technical breakdown led to an unmitigated disaster in the crypto segment, as all of the majors crashed, erasing hundreds of billions of market cap in the process. The collapse of the alleged Ponzi scheme of Bitconnect added insult to injury and caused another wave of selling in late trading, driving the price of Bitcoin to $10,000, a bit earlier than expected.

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BTC/USD, 4-Hour Chart Analysis

The most valuable digital currency rebounded as much as 15% after the late-session crash, but the selling pressure remained strong and today BTC briefly traded below yesterday’s low, with most of the majors holding up above the crash low.

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That said, the sell-off is unlikely to be over and volatility is probably here to stay for the week, with violent swings in both directions. The coin is still likely to push lower, with a possibly lengthy bottoming phase, so a quick recovery to the record highs is unlikely, but strong support is found below $10,000 at $9200, $8200, and $7650.

Traders should be aware of the elevated risk in short-term positions here, while long-term investors could slowly accumulate positions on the sell-offs, as the coins are headed to oversold territory.

A Little Perspective

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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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10 votes, average: 4.90 out of 510 votes, average: 4.90 out of 510 votes, average: 4.90 out of 510 votes, average: 4.90 out of 510 votes, average: 4.90 out of 5 (10 votes, average: 4.90 out of 5)
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