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Bitcoin Caps Off Worst Month in Three Years as Losses Mount

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Bitcoin steadied above $10,000 on Wednesday, but not before closing out its worth monthly performance since 2015.

January Woes

The world’s largest digital currency by trade and market cap has declined 29% since New Year’s Eve. After adding more than $3,000 in the first week of January, bitcoin posted steady losses for the rest of the month, eventually bottoming near $9,600.

Bitcoin routinely under performs in January, having only one positive result during the month since 2013. When evaluated monthly, the other major drop for the cryptocurrency occurred in February 2014 when it lost 36%, according to CNBC.

The intense selloff hasn’t been limited to just bitcoin. Virtually every major cryptocurrency has declined sharply in recent weeks amid closer regulatory scrutiny, cyber attacks and U.S. federal probes.

The global cryptocurrency market declined roughly 17% for the month of January. That represents a monetary loss of more than $100 billion.

At the time of writing, the total market cap for all cryptocurrencies is roughly $506 billion. The market peaked above $830 billion in early January.

Strong Headwinds

Bitcoin has faced multiple setbacks since peaking near $20,000 in December. The coin lost market share during an early January rally that took the global cryptocurrency market to record valuations. It has also been at the forefront of a massive correction since the middle of January as South Korean regulators debated new restrictions on digital assets.

By the end of January, bitcoin’s market cap had retreated 50% from its all-time high. Over the past month, its share of the cryptocurrency market fell from around 39% to roughly 33%. A mere 12 months ago, bitcoin was more than 85% of the market.

Although BTC remains the undisputed leader in terms of volume, Ethereum and Ripple turned over more than $100 billion each over the last 31 days. In the case of Ethereum, monthly trade volumes hit $150 billion, according to data provider CoinMarketCap.

Bitcoin’s most recent drop below $10,000 exposed the digital currency to further downside risks, with traders eyeing fresh support levels near January lows.

Forecasters say bitcoin enthusiasts have a lot to be optimistic about, as the digital currency continues to attract retail investment and institutional interest. However, scalability issues and regulatory uncertainty present considerable risk over the medium term. Although many of these issues are expected to be resolved, volatility will be a staple of the market for the foreseeable future.

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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4.6 stars on average, based on 673 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Bitcoin

Bitcoin Price Stabilizes After Brutal Drop; Futures Trading Suggests Bears are Still in Control

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Bitcoin Options

Bitcoin’s massive selloff showed signs of abating Wednesday, as prices consolidated above $4,500, suggesting that the market may have found an interim bottom. However, activity in the futures market suggests traders are still keen on shorting BTC, which could open the door to further losses in the near term.

BTC/USD Update

The bitcoin price reached a session low of $4,295 on Coinbase before staging an immediate recovery. At the time of writing, the San Francisco-based exchange was quoting bitcoin’s price at $4,536, which represents a gain of 3.2% from the previous day.

Bitcoin was trading at a $140 premium on Bitfinex, with the latest price quoted at $4,672.

Aggregate pricing data courtesy of CoinMarketCap shows a price-per-coin of $4,582, a gain of 2.2% on the day. That gives bitcoin a total market capitalization of $79.5 billion. At the start of last week, the largest digital currency had a market cap of around $110 billion.

In the last 24 hours, trade volumes have fallen by roughly 10% to $7.4 billion, which is still much higher than the recent average.

Derivatives Trading Surges

Interest in bitcoin futures contracts has picked up sharply amid the downturn, with derivatives platform BitMEX beginning to dominate the market. As Hacked reported on Tuesday, the platform accounted for more than 41% of bitcoin’s daily trade volumes on cryptocurrency exchanges. On Wednesday, that number had fallen to just over 39%. In terms of daily turnover, no other exchange even comes close.

BitMEX has processed a total of $5.3 billion worth of trades over the past 24 hours, according to CoinmarketCap. Over the past seven days, volumes have exceeded $14.1 billion. It ranks first along both metrics.

According to the October edition of CryptoCompare’s Exchange Review, BitMEX has accounted for roughly 90% of the volume for bitcoin futures. This came at a time when bitcoin trades on traditional futures exchanges, such as CBOE and CME, were relatively low. However, they too have experienced a notable surge in volumes over the course of the recent selloff.

As Bloomberg recently reported, the combined open interest in CBOE/CME bitcoin futures was equivalent to 22,266 BTC as of Monday, the highest on record. CME’s current contract, which allows investors to profit from bitcoin’s decline, will expire at the end of the month.

The above information suggests market participants are shorting bitcoin at an ever increasing rate, which eventually drove prices to the lowest level in over 13 months. The free-fall has negated fundamental facts and technical inflection points, creating a sense of confusion about where the new floor may end up. It’s not entirely clear whether Tuesday’s low represents the new bottom or whether investors can expect a renewed selloff in the near term. Whatever the case may be, long-term holders can expect an extreme discount on bitcoin’s price for the foreseeable future.

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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4.6 stars on average, based on 673 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Crypto Update: Short-Term Swing Low Forming?

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After the two-day rout that kicked off the week, the major cryptocurrencies continue to trade in a very volatile manner, with several wild swings in both directions in the last 24 hours. Most of the top coins held up above the initial spike lows of yesterday, although Bitcoin fell to a marginal new low later on Tuesday.

While selling pressure remains apparent in the segment, the volatile consolidation is likely a part of a short-term bottoming process, which could set up a more sustained bounce following the selling panic. The most important reference price levels for short-term traders are the $4450 level in Bitcoin and the $130 level in Ethereum.

Despite the possible bounce, the long-term setup in the segment is still overwhelmingly bearish, and any new positions should be considered ultra-short-term, and traders should apply strict risk management.  With the strong bearish leadership still clearly present, even in the case of a durable bottom, an extended period of volatile consolidation will likely precede a confirmed trend change.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still trying to form a short-term swing low, despite being relatively weak in the past 24 hours from a technical perspective, and the $4450-$4500 support zone remains in the center of attention. The coin got close to the $4000 level during yesterday’s volatile spikes, with the initial bounce topping out just above the $4700 resistance level.

Further levels of interest are ahead near $5350 and $5600, while primary support is still found between $4000 and $4050, and traders should still only consider very short-term positions in BTC. Volatility will likely remain very high in the coming period and the long-term sell signal is clearly in place in our trend model.  

ETH/USD, 4-Hour Chart Analysis

Ethereum managed to hold above its initial spike despite falling back below the $130 level several times yesterday. The coin is showing early signs of stability, but given the steep long-, and short-term downtrends and the extended period of relative weakness, traders and investors would need significant technical improvements to consider new positions in ETH.

That said, playing a bounce to the $150-$160 zone is likely in the coming period, with even the previous bear market low near $170 possibly in sight after the rout, but odds still favor at least a test of the recent lows before a sustained rally.

Ripple Still Strong as Stellar Tests Support Zone

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to hold above the key $0.42-$0.46 long-term support zone, clearly being the strongest among the majors from a technical standpoint. Despite that, our trend model is still on a sell signal with regards to the short-term time-frame, and the coin’s relative strength have been waning somewhat in the past couple of days, so traders should still not enter new positions here. Further support levels are still found near $0.375 and $0.355, with resistance ahead at $0.51, $0.54, and $0.57.

Stellar/USD, 4-Hour Chart Analysis

Stellar got dragged significantly lower by the latest round of the segment-wide crash, and although it held up above the prior bear market low, the short-term setup is still clearly bearish in the relatively strong coin’s market as well.

The long-term picture is neutral and the support zone between $0.1830 and $01930 is still looking strong, but traders and investors shouldn’t enter new positions here, with strong resistance ahead at $0.21 and between $0.2350 and $0.2450.

LTC/USD, 4-Hour Chart Analysis

One of the bearish leaders of the segment, Litecoin also showed signs of stability yesterday, and that’s positive news for the whole market, at least concerning the short-term outlook. The coin managed to hold on above the initial spike low, and although it’s still stuck below the $34.50 resistance level, a larger bounce could be ahead, possibly up to the $38 level. That said, the broader downtrend is clearly dominant and there is still no sign of a sustained bottom in the market of LTC.

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 399 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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Blockchain

Blockchain and Real Estate: An Industry Overview

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Blockchain is going to change nearly every industry under the sun, but the effect will not always be the same. The big strengths of blockchain technology are efficiency, security, and transparency, and each industry will be affected in a slightly different manner.

Real estate is one example of an industry that presents a huge opportunity for the technology, with different areas showing weakness and providing a chance for the technology to reign supreme.

How Real Estate Connects to Blockchain

The fact is that distributed ledgers provide a level of efficiency that current systems lack. The technology also prevents fraud and increases trust in the system, since all the information is public. Finally, even though blockchain technology is transparent, it is also private.

Combine all these features, and you have a big winner of an innovation. One of the topmost predicted innovations is the tokenization of assets, which will lower transaction costs and open up commercial real estate to more retail participants.

The three most sought after purposes for blockchain technology are smart contracts, transfers of value, and record keeping.

Current Big Players

As would be expected, the biggest companies have the largest opportunity for growth within the space. For example, Propy was founded in 2015 and raised $15 million for a platform that allows for international home purchases. It is essentially AirBnb for foreign investors, but operates in a much more efficient manner.

Harbor fulfills a more niche function by helping list real estate and private equity assets in an SEC compliant manner. There is huge value in adding liquidity to these assets, and the ability to resell them adds even more liquidity. However, current regulations prevent the trading of these security tokens, if at least for the time being.

Finally, you have a company like Ubitquity that focuses on the record-keeping aspect of real estate, which is probably where the most inefficiencies are. The innovation here is simple: humans make errors, blockchain doesn’t. It also can’t be incentivized to commit fraud and works as an AI solution to much of the problems in the space.

What’s the Hold Up?

Right now, one of the biggest holdups is the nascent stage of the technology. No one can decide upon the proper consensus protocol, and that has slowed down its chances of being accepted by the industry-at-large anytime soon.

Processing speed is also a common objection that needs to be faced before a scalable solution begins implementation.

It is expected that the real estate industry will adopt blockchain technology in accordance with their clients’ needs. Whether occupiers or investors have adopted it will have a huge effect on their decisions to adopt it. Based on past experience, banks and insurers are likely to be some of the first to adopt the technology.

Analysts in both the technology and real estate industry tend to agree that it is reasonable to expect widespread adoption within a decade, with many more individual applications being formulated  along the way.

As an investor, the best course of action is to investigate the individual use cases, and make a decision based on which one you believe will have the strongest future in each space.

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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