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Analysis: Money is Still Pouring In – Bitcoin, Litecoin, Stellar Lumens, Augur, Dash and Ethereum

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As you all must know by now, I am a trader at heart, not an investor.  It’s always been difficult for me to buy-and-hold, because I feel like I can see where corrections will take place, so why not sell if you know its coming?

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But these last few days I am having a slight change of heart.  There is so much money pouring into the cryptocoins, and there is no reason to believe that will stop soon.  In fact, the amount of money pouring into there might just keep on increasing for years.

Case in point.  Bitcoin.  The last 2 times I saw a selloff was due, they both occurred, but were very weak corrections.  That can only mean that there are a lot of buyers out there.  Not like the old days when there was a small handful of crypto-traders.  At that time, when a correction occurred there were no more buyers left – everyone was all in – and price plummeted.

So who are these new buyers?  It doesn’t matter, but it seems likely that many of them have never heard of the altcoins. Last week they want to buy Bitcoin at $1800, but neglected Litecoin and his siblings at far cheaper prices.  I don’t think that this ignorance will continue forever.  One day in the not-distant future money will likely be pouring into the altcoins as well.

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So it occurs to me that now the smart thing to do is just buy a ton of cheap coins, the ones that are moving, and sit on them.  For example for every 10,000 XLM or XRP one buys, every 1 cent rise in price is worth $100.  Is there anyone who doubts that the price of these coins will be more than $1 by the end of the year?  They might be closer to $10 or $20.  What if you bought 500,000 or a million of them while they are still cheap?  That’s what the so-called Bitcoin whales did 5-6 years ago.  With 500,000 of these cheap coins, every 1 cent rise is $5,000.

It seems like those of us lucky enough to be on this train at this juncture have a once-in-a-lifetime opportunity.

Like I said, it has taken a truly profound realization that we are in the beginnings of what might be a monster multi-year bull market to make me realize that investing is a better option than trading …

Speaking for myself, I will likely not short any market.  When I see a correction coming I will look to buy more if I can, at lower prices.  Its like we are in 1977 and buying yahoo and Microsoft stock at $1 a share, particularly in the case of the still really cheap altcoins that are seeing some volume.

DASH

DASH has been superglued to a 3rd arc pair for some time now.  It is one right side of the pair now. Perhaps falling to the top of the square will be enough to shake it free.

Ethereum Classic

ETC has been moribund since hitting the 3rd arc.  When it gets to the arc again, let’s see what she does.

Ethereum

ETH has been stuck in an arc pair for some time.  But it appears that she will be forced to either break up or break down.  My guess is she will break upwards.

Litecoin

LTC corrected at the end of a square.  She will test that 4th arc again soon.  My guess is she will penetrate it.

Augur

Augur has had plenty of time to advance since clearing the last arc.  The fact that she has not means she probably will continue moving sideways to the next arc.

Bitcoin

XBT corrected at the 3rd arc of this setup as expected.  But it was/is a weak correction. My guess is that the arc will yield on the next test.  Next resistances are $2600 (4th arc) and $3600 (5th arc).

Stellar Lumens

I like Stellar Lumens.  I see that the 2nd arc has been a problem though. If the next test of the arc fails, price will likely fall.  If it does, I will use the opportunity to buy more.

Remember:  The author is a trader who is subject to all manner of error in judgment.  Do your own research, and be prepared to take full responsibility for your own trades.

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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5 stars on average, based on 1 rated postsJim has an MBA from the University of Southern California. He has had a long career in both Corporate Finance and IT. Along the way he discovered that trading was a vehicle with great promise, but struggled for a long time without a mentor. After having been knocked down many times and having struggled to get back up, he had an epiphany and realized that geometry was a solution. He shares his experience here. If you do well as a result of suggestions made here, feel free to say thank you :) BTC: 1FUq3GB1Q8zz2JpuBr7YHzVBKnaWoxgmya Follow him on Twitter (@jimfred1276) or email him at jimfred1276 at gmail.




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36 Comments

36 Comments

  1. Gabriel

    May 14, 2017 at 11:54 am

    On point as always.
    When the price of a few alts went down recently, I did wonder whether to sell and buy again after the correction, but I didn’t see the point, as the corrections were quickly overcome. The principles of value investing apply perfectly in the current environment. Buying great assets at very cheap price… What else would you need?

    • Jim Fredrickson

      May 14, 2017 at 12:29 pm

      I know you are correct on this point. For myself, I must struggle to change old habits…

      • jarosatori

        May 14, 2017 at 1:11 pm

        So you’re proposing to sell XRP at this point and wait for cheaper price? How serious the correction of XLM could be in your opinion?

        • Jim Fredrickson

          May 14, 2017 at 2:43 pm

          I only tell you what I see. Sometimes I see things correctly, sometimes I miss things. What traders do with my thoughts is of course up to them.
          XLM has just made a bullish move after a long sideways move. (I hate sideways moves the most, personally. It is so very easy to get lost.) But after a bearish fakeout, the 2nd arc that has stopped XLM for quite some time has apparently yielded. The candle has not closed yet, but the penetration is convincing.
          As for XRP, I see a short term bearish case, and a longer term bullish case.

          • jarosatori

            May 14, 2017 at 8:43 pm

            Thank you very much for answer. How much time is “long sideway move”? 🙂 Today XLM hit almost 0.041 USD per token on kraken – was this the test of 2nd arc?

  2. tadej

    May 14, 2017 at 12:23 pm

    There is a lot of analysis out there predicting XRP fall. The picture I see is that XRP is quite strong and will continue to rise for the reasons mentioned in the beginning of the article. What do you think?

    • Jim Fredrickson

      May 14, 2017 at 12:27 pm

      I see your point. There is a bullish case to be made for XRP. But I also see a bear case, though the bear case is short term. Longer term there is not much doubt that the XRP price will be much higher in a month’s time. (imho)

      • iamniks

        May 14, 2017 at 8:56 pm

        I know that you are not a big fan of rumors, however, it is very likely that Ripple will announce tokens lock-up on May 22 during the Consensus conference (https://twitter.com/coindesk/status/859105209854906373). This means an instant increase in value due to decreased amount of tokens in the system. So if there would be a bearish move, I’d use it to buy as much as possible during this week and sit quietly 🙂 What do you think?

  3. hanjit@connoisseurs.com.my

    May 14, 2017 at 1:22 pm

    Hi Jim,

    Thanks for the update. Its always a good thing hearing your opinion on these cryptocurrencies.

    Regarding Stellar, do you see iyho , these gems will one day be giants?

    Have a good week ahead.

  4. MSNP05

    May 14, 2017 at 5:43 pm

    How do I buy XRP and stellar lumens as I cannot buy those from coinbase ?

    • MaxButya

      May 14, 2017 at 6:10 pm

      Hey, you can register on Poloenix and buy these coins there!

    • gullyfoyle

      May 14, 2017 at 8:42 pm

      They are also available on Kraken. I prefer to trade alts on polo and XRP, XML, XMR on Kraken, spreading the risk as it were between exchanges.

    • Jim Fredrickson

      May 15, 2017 at 12:26 am

      Inconvenient, I know, but you could open an account at an exchange that offers them? I trade at kraken. You can buy them there.

      • MSNP05

        May 16, 2017 at 7:09 am

        Unfortunately i live in WA state in US and both Kraken and Polenix are banned here.. is there another exchange where i can purchase these ?

        • Jim Fredrickson

          May 16, 2017 at 7:13 am

          Can’t you just use a vpn and get to kraken through a different country’s ip? I imagine that would be a quick and relatively easy solution??

  5. gullyfoyle

    May 14, 2017 at 8:49 pm

    As much as I want to believe the multi-year bull market talk. My logical side is screaming at me to be careful here. Are we in exuberance? I don’t know. The landscape is different than 2013. There are more technologies being developed and it seems that pricefinding is in the offing.
    Despite elevation, your suggestion to snag up cheap coins on good projects could do well.

  6. Ershad

    May 15, 2017 at 12:30 am

    Hi Jim,

    As always thanks for the great analysis really am greatufl, I wanted to ask can you recommend the top 3 cheap altcoins to buy while their cheap? Also I sold my XRP for the time being but looking to get back into XRP as soon as you give the signal.

    Kind regards
    Ershad

    • Jim Fredrickson

      May 15, 2017 at 1:48 am

      If XRP makes a high above the last two tops (~.23) then it seems the danger will have passed. I note that the coin did turn down at the end of square as seemed likely, but did not fall hard. Its possible that it was a false alarm.

      • iamniks

        May 15, 2017 at 5:36 am

        It is 24.5 now:( What is the best place to put buy order now?

        • Jim Fredrickson

          May 15, 2017 at 5:40 am

          so close to the ATH now that i would wait for a rise/close above the ath. but i’m not here to give such detailed advice on a regular basis. I am getting uncomfortable with this level of hand-holding…

          • iamniks

            May 15, 2017 at 7:10 am

            Sorry for that, thank you for your suggestions and good work. Everyone here appreciate it!

  7. rednivad

    May 15, 2017 at 6:47 am

    I am new in Cryptocurrency and have recently started investing in the same. The biggest success for me is Ripple where I invested $700 last Thursday and now it is $1000.

    I am very lame and dont know where to invest. I have kept a budget of $3000 for investment. Please can you recommend few currencies to invest?

    I also bought some currency for Doge, do you think it has potential to grow to $1?

    I will wait for your reply.

    • Jim Fredrickson

      May 16, 2017 at 12:03 am

      DOGE (XDG) has been rallying a bit. I own some too. I’m not sure how far it can go because there are so very many coins out there. But, who knows?

  8. chorez

    May 15, 2017 at 3:27 pm

    Hey Jim, can you go more into detail on that arc theory, that you are relying on? can you explain it maybe in an article or provide some further reading?

    Thanks

    • gullyfoyle

      May 15, 2017 at 6:12 pm

      It’s Gann angles/arcs. Lots of info available online.

    • Jim Fredrickson

      May 16, 2017 at 12:08 am

      As gullyfoyle points out, it is Gann angles and arcs. But they have been put together in a nifty tool developed by Eduardo Altman of gunner24.com.

  9. rednivad

    May 16, 2017 at 12:12 am

    Ltc is down do you think it is good time to buy?

    • Jim Fredrickson

      May 16, 2017 at 1:04 am

      Depends. Long-term its a great buy at these prices (imho). Short-term I think it might drop a bit more.

  10. karthikg82

    May 16, 2017 at 1:49 am

    Hi Jim,
    How do you see today’s correction in LTC after the segwit activation?

    • Jim Fredrickson

      May 16, 2017 at 7:03 am

      I am glad to hear about segwit, but don’t think you can use news like that for short-term trading. long-term it is likely relevant, but as you can see, traders, if anything, sold the news. one of the reasons i don’t use news to trade.
      ltc likely has a few more dollars to correct.

  11. rednivad

    May 16, 2017 at 7:23 am

    Hi Jim all the currency is down except stellar and ripple. Which currency to invest in short term? would you suggest trade Doge with LTC/PPC?

    • Jim Fredrickson

      May 16, 2017 at 7:29 am

      XDG is doing well. I own some, but wonder how high it can go, when there are so many billions of coins issued? But it might pull off a good rally despite that? its possible.

  12. rednivad

    May 16, 2017 at 7:41 am

    Thanks Jim Do you see growth potential in PPC in short term? And regarding LTC at what point should we buy?

  13. SuccessHappinessFreedom@gmail.com

    May 16, 2017 at 2:49 pm

    Litecoin down to $24USD? should I buy more or sell out?

    • Jim Fredrickson

      May 17, 2017 at 12:19 am

      IMHO this is a time and price to start buying LTC, not sell it.

      • SuccessHappinessFreedom@gmail.com

        May 17, 2017 at 12:25 am

        Thank YOU!! I truly appreciate your perspective.

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Analysis

The Crypto Bull Is Off Of Life Support

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There may be some bad days for cryptocurrencies in the future.  There may even be a few bad weeks. But crypto markets survived the worst shellacking in their brief history.  The soon to be ending month of April is an appropriate time for Mark Twain: “Reports of my demise have been greatly exaggerated”.

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Anytime an asset class gains $100 billion in value over the course just under 30 days, the death watch is over.  Anytime the largest member (bitcoin) gains 30% in value and still ends up being the weakest major performer, the crypto bull market is not only off life support, it is alive and in recovery.

Signs of Better Times

Making highly successful predictions about the direction and magnitude of stocks, bonds or cryptocurrency is a 51% proposition. What this means is that at least 49% of the time, you are going to be wrong.  

At least with stocks and bonds there is a huge database that can be massaged in the hope of  accurately predicting the future. None of that applies to crypto. So here are some of the things that create confidence that the future will be far better than the most recent past.

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Relative Value

When the stock market is near a record high,  interest rates are headed much higher and the market fear index, the VIX, suddenly shoots up, this is a clear sign of an overvalued market for conventional intangible assets.  The same can be said for tangible things like real estate.

After having lost more than half their value in something like 90 days, cryptocurrencies offer comparative value.  Most interesting is how the smallest and most speculative cryptos experienced the best performance. That type of recovery never took place in the post dotcom period.

This is a measure of long term vision investors are applying.  Many of these Gen III projects are little more than white papers and promises at this stage.  This is good to remember the next time someone drags up the notion of a crypto bubble.

Skeptics will point out the thin trading in many of these Gen III names as the underlying reason for their quantum moves.  There is probably some truth here, but simple risk analysis argues in favor of the big familiar names like bitcoin holding leadership.  Crypto investors obviously see things differently.

Cryptocurrencies Can Take A Punch

While watching the favorable price action in recent weeks, there was little obvious impact from the same regulators that contributed to the Q1 price avalanche.  What we are referring to is the April 23rd talk at the MIT Technology Review: Business of Blockchain.

The secession was headlined by an address by Gary Gensler the former chair of the CFTC. The issue at hand: are cryptocurrencies securities and thus regulated by the SEC?  In my mind, Gensler exploded a bomb: Ethereum and Ripple were securities while bitcoin fit the description of a medium of exchange.

Wow, think about this for a second.  If Ethereum was truly a security that could spell a miserable amount of registration work to conform with SEC regs.  While that would be unpleasant, the implications for the thousands of ICO tokens using the Ethereum platform could be far worse.  Fortunately, Gensler isn’t running the SEC but his legal arguments can and probably will be used at some point.

Back in February, when crypto prices were tumbling, Gensler’s comments would surely added to the fear and selling pressure.  On the day of Gensler’s talk, ether rose in price by nearly 7% according to Coinbase while Ripple gained 8%. This shows that cryptocurrency investors are learning to take a punch without losing perspective.

Trade Signs Are Good

We can all pretty much agree that we are relieved when see prices are rising.  However, when price increases are driven by higher volume, that gets technical analysts buzzing. Since the beginning of April, bitcoin transactions have increased 90% and Ethereum by 50%.  While all of this has been happening the median fee for bitcoin has been $0.16 and ETH is an even lower $0.07. While this isn’t exactly free, it is a gargantuan improvement over the $30 bitcoin investors were paying back in December.

A Two Way Street

Not every period will be as profitable as the month of April. Double digit price changes, the hallmark of this market, are part of the drill.  But even after the April rally, cryptocurrencies will still offer better value than the average Nasdaq technology stock.

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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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4.4 stars on average, based on 64 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

Ether in Bears’ Hands

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Ether in Bears' Hands

Ether has been doing great over the last few days, but now it’s declining again, trading at around $646, after hitting a 6-week high at $712.43. Over the last session, Ether confirmed at least two bullish trend lines at $665 and $675, which were successfully tested and broken out today. While Ether was above $700 it had some good chances to recover, but now it is quite doubtful.

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The bulls quickly gave up the support at $665 today, and now they need to push the price back to $700. This will be the only chance to hit the $712 high again.

Overall, any price above $675 will help Ether recover, while any price below will make it continue declining. $675 is actually the current resistance, while $712 is another one. $644 is the key support, with a longer term one at $574. The MACD keeps on rising and is in the positives, issuing a buy signal. The Stochastic is, on the contrary, giving a sell signal, despite also being in the positive area.

There wasn’t too much news on Ether over the last few days. Still there was some, and what is worth mentioning is the hack of MyEtherWalet, one of the most popular crypto e-wallets out there. The hackers stole 215 coins, which equals $150,000. The scheme was very simple: the thieves hacked the DNS server and then routed users to a phishing website. The issue was quickly spotted and resolved, but the mere fact the e-wallets are still so much sensitive to hacker attacks is troubling.

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Meanwhile, Massachusetts Institute of Technology has recently published a paper where the scientists analyzed three ways of ‘killing’ Bitcoin. The first one is creating a global Fed based currency, the Fedcoin, that, with the time passing, could eliminate all other cryptos, including BTC. The Bank of Canada actually went this way some time ago, by building a crypto network based on Ethereum. The second way is creating a new crypto based on the largest social networks out there, which could enable pushing out BTC from the market, given the volumes and the number of social media users. Finally, the third way is issuing a large number of cryptos, each designed for a particular purpose. This may also greatly affect the top 10 altcoins, too.

Anyway, the crypto market is still closely watched because of the high degree of anonymity and lack of (or no) regulation.

ETH/USD

Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex

 

Disclaimer

Any forecasts contained herein are based on the authors’ particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

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 stars on average, based on 2 rated postsI have two degrees in Social Psychology and Economy. After graduation I worked as the Head of the Laboratory of Technical and Fundamental Analysis of Financial Markets at The International Institute for Applied Systems Analysis. The experience and skills he gained helped me to realize my potential as an analyst-trader and a portfolio manager in an investment company. At the moment I'm a financial expert, writing for various financial media sources and a Chief Analyst at RoboMarkets.




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Analysis

Pre-Market: Stocks Up Slightly After Plunge but Sellers Clearly in Control

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Global stocks continued the bearish trend that initiated last week, while volatility increased significantly yesterday during the US session. The major US indices plunged by more than 2% and dragged global benchmarks lower as well, so suddenly the correction lows are in sight again. The momentum of the move suggests that we will see at least a test of the lows, as the charts continue to show bearish pressures across the board.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

Today, stock futures have been slightly above the lows from yesterday, but the short-term charts are clearly wounded and any bounce should be treated as a counter-trend move here. While significant new correction lows are not guaranteed here, bulls should wait until a short-term trend change rather than guess the bottom, as the risks of a deep downswing are high.

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US 10-Year Treasury Yield, 4-Hour Chart Analysis

The rising trend in Treasury yields is among the catalysts of the move, as we painted out several times, and with the whole yield curve still drifting higher to new multi-year highs, the short-term trend could continue. European stocks are holding up well compared to their US peers, and the Japanese Nikkei is also relatively strong, and all of that could be attributed to one thing, the Dollar’s strength.

EUR/USD at Make-Or-Break Level

EUR/USD, 4-Hour Chart Analysis

Forex markets are very active these days, as the massive move in yields boosted the Dollar, which has been gaining ground compared to all of the majors. The most-watched EUR/USD pair is just above the March low, very close to hitting a 3-month minimum, with only 30 pips of cushion remaining for bulls.

Dollar Index, 4-Hour Chart Analysis

The trend in the Dollar index suggests a breakdown in the coming period, as the broader measure broke out from a range that has been intact for several months. Of course, a hawkish ECB statement tomorrow could save Euro bulls here, but given the bearish positioning regarding the Dollar, the “pain trade” would probably be a strong Dollar rally.

Commodity currencies continue to trend sharply lower, despite the stability in the price of oil, and as we noted several times, the Australian Dollar and the Canadian Dollar have been reliably leading risk assets in the last couple of months, so this trend doesn’t bode well for equities.

The same goes to the negative reaction of the most-watched quarterly earnings releases (Google parent Alphabet, Caterpillar), so for now, caution is the name of the game for equity investors.

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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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4.5 stars on average, based on 233 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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