Analysis Bitcoin Futures Opened the Door to Short-Sellers, Resulting in Subsequent Crash: Study Published 8 months ago on May 9, 2018 By Sam Bourgi The introduction of bitcoin futures was widely regarded as a watershed moment for cryptocurrency. But now researchers say derivatives precipitated the rise and subsequent fall of the digital asset class, mirroring a similar cycle before and after the 2008 subprime mortgage crisis. Shedding Light on Bitcoin Futures Bitcoin futures have long been regarded as a double-edged sword. On the one hand, they open up the crypto sphere to institutions and day traders who otherwise would not have bet on digital assets via online exchanges. On the other hand, the derivatives product gave short-sellers a much easier way to bet on declining prices. New research from the Federal Reserve Bank of San Francisco uncovers a much stronger link between bitcoin futures and the broader market decline that occurred during the first quarter. The paper, which appeared in the Economic Letter publication on May 7, shows that bitcoin prices peaked on the very same day that bitcoin futures contracts began trading on the Chicago Mercantile Exchange on Dec. 17. The researchers differentiated bitcoin’s transactional demand from its speculative demand, arguing that the introduction of futures made it much easier to bet on the decline in BTC. So while speculative demand had always been there, the introduction of futures made it more prominent. Bitcoin futures got off to a rocky start but have since picked up amid the latest surge in market prices. CBOE, which was the first to launch the bitcoin futures contract, has averaged about 6,000 contracts daily since trading began back in December. That number surged to 18,210 for the May contract, easily topping the previous high set in mid-January. An Ominous Comparison Bitcoin’s price movement since the launch of the futures contract mirror the rise and collapse of the home financing market one decade ago. Citing 2012 research by Fostel and Geanakoplos, the Fed analysts said the initial mortgage boom was driven by new innovations in securitization and bond groupings, which attracted bullish investors. Meanwhile, the subsequent collapse was triggered by the development of new products that allowed short-sellers to bet against the market. “Similarly, the advent of blockchain introduced a new financial instrument, bitcoin, which optimistic investors bid up, until the launch of bitcoin futures allowed pessimists to enter the market, which contributed to the reversal of the bitcoin price dynamics,” the researchers said. As we are all well aware, the U.S. housing collapse triggered the biggest economic landslide of a generation. While no-one is suggesting that cryptocurrency will have a similar impact (it can’t due to the relative size of the market), a comparable decline would be devastating to the blockchain industry as a whole and not just cryptocurrency. This dynamic ecosystem includes exchanges, startups of all stripes and the plethora of service firms operating within the market. Bitcoin peaked at $19,511 on Dec. 17 before a 70% reversal just a few months later knocked the market back below $6,000. The cryptocurrency has since recovered from its bear market low, with prices trading above $9,100. 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. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (12 votes, average: 4.92 out of 5)You need to be a registered member to rate this. Loading... Sam Bourgi 4.6 stars on average, based on 736 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: firstname.lastname@example.org Twitter: @hsbourgi Follow @HackedCom Feedback or Requests? Related Topics:btc/usdcboecme groupsan francisco fed Up Next Stock Picks: Medifast, Axon Enterprise, Whiting Petroleum Corporation Don't Miss Dow Jones Industrial Average Technical Update: May 8 You may like Crypto Market Falls in Installments; Bitcoin and XRP In Lockstep; Small Alts Pump Crypto Update: Coins Retreat After Rally Attempt Bitcoin’s Price Recovery Stalls as BitMEX Shuts Down U.S. Accounts Crypto Update: Coins Hit New Lows But Bearish Momentum Weakens Bitcoin Braces for More Pain Following 16% Correction Crypto Update: Market Remains Under Pressure as Coins Fail to Recover Click to comment You must be logged in to post a comment Login Leave a Reply Cancel replyYou must be logged in to post a comment. Altcoins Tron Price Analysis: TRX/USD Looks Set to Give Up $0.02000 Territory Again Published 2 hours ago on January 16, 2019 By Ken Chigbo TRX/USD under heavy selling pressure late on Tuesday, dropping over 7%. Bears are gunning for another retest of vital support, seen above a breached pennant patterns structure. TRX/USD has been under heavy selling pressure on Tuesday, nursing chunky losses at the time of writing of 7%. Bears remain well in the driver’s seat in the latter stages of the day, with momentum picking up pace to the downside. The bulls lost much wind behind their sails on 10th January, this coming after enjoying a strong period in a run to the north. TRX/USD from 4th January – 10th January had gained a massive 75%, breaking out of a bullish pennant pattern structure. It also managed to briefly extend above a known area of supply, which exacerbated the upside pressure. TRX/USD daily chart. The above-described move saw the price print its highest level seen since 31st July 2018. Shortly after this high print, a big wave of selling kicked in. As a result, a very bearish daily candlestick was produced on 10th January. Daily sessions since this have closed in the red, apart from 14th January. TRX/USD managed to receive strong support on top of the breached pennant, providing some brief relief after the reversal was well underway. Despite the current trend south, news flow around the Tron foundation continues to be plentiful and upbeat. OKCoin Supports TRX As reported by the CCN team, OKCoin announced it has listed TRX on its trading platform. This coming via the exchange’s Medium blog today. OKCoin detailed that “starting today, authorized OKCoin customers can deposit TRX, and starting on January 17th they’ll be able to trade TRX against USD, BTC, and ETH.” Of note, the OKCoin platform was founded by the same people behind OKEx; however, OKCoin primarily focuses on traditional swaps and allows for bank deposits. In addition, OKCoin accommodates U.S clients, whereas OKEx do not. Justin Sun Welcomes New Partner ABCC Exchange ABCC Exchange, a cryptocurrency exchange platform, announced it is partnering with the Tron Foundation. The company tweeted, “ABCC is the 1st exchange that will list TRX 10 tokens. We are one of the top exchanges with great security and user interface. Stay tuned!” On the back of this, Tron founder Justin Sun replied, “ABCC is truly an awesome platform that has witnessed great development. We are glad to partner with ABCC as it’s the first exchange listing TRX10 tokens”. Technical Review – TRX/USD Given the current downside momentum, eyes are on another retest the breached pennant pattern structure. Where the two trend lines cross, support will be sought here, which could see the $0.02000 territory come under threat. Should the bears manage to force a breach, then a prior action demand zone will be called into play, within the $0.01700 price region. 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. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (0 votes, average: 0.00 out of 5)You need to be a registered member to rate this. Loading... Ken Chigbo 4.6 stars on average, based on 106 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets. Follow @HackedCom Feedback or Requests? Continue Reading Analysis Futures Update: Deeper Correction Looms for S&P 500 Published 4 hours ago on January 15, 2019 By Kiril Nikolaev, CFA The S&P 500 FUTURES (SP) has been in a multi-year uptrend ever since it recorded lows of 665.70 in March 2009 closer to the end of the financial meltdown. If you are one of those who rode this trend early on, you would have substantially grown your capital over time. Even with the recent correction, you likely believe that the market will resume its uptrend very soon just like it did before. Nevertheless, this is not the time to be complacent. The recent SP bounce is looking like the dead-cat type. This gives us reasons to believe that there might be more pain ahead for investors. In this article, we show how there’s a deeper correction looming for the S&P 500 index and, by extension, its futures. Bearish Short-Term S&P 500 futures may have rejected lower prices when it bounced off lows of 2,371 on December 26, 2018. However, there’s very little about this bounce telling us that the market remains bullish. In fact, several technical indicators suggest that this is a relief rally rather than a true recovery. Daily chart of SP First, we can see the SP creating a V-shaped pattern. While a market can reverse using this pattern, it rarely happens. When it does, there’s always time given for accumulation at the bottom. This is something that we do not see in the market’s V-shaped structure. Without some form of accumulation to keep the move up sustainable, the market is at risk of giving up all of its gains. Gold (XAU/USD) as sample of V-shaped reversal Speaking of a solid base, the rally somehow materialized even with declining volume. This usually happens in an oversold market where sellers take a step back and allow the market to recover so they can short the bounce. We can see this possibility playing out in the S&P 500 futures as the market approaches resistance of 2,619.60. With weak volume and fading bullish momentum, we expect the S&P 500 futures to resume their slide in the next few days. Weak Long-term Technical Setups The technical setups in the longer time frame affirm our assumption that more pain is ahead for this futures market. First and most importantly, there seems to be a divergence between volume and price. In a healthy bullish market, price goes up as volume increases. This makes sense as a growing demand in the form of increasing volume lifts prices. On the other hand, a rising market with weakening volume is a red flag for most investors. It hints that the market is unhealthy and may be manipulated by an unknown entity. We’re seeing this divergence in the S&P 500 futures. Volume divergence on the monthly chart On top of that, the 100 MA on the weekly chart is acting as a firm resistance. It is crawling closely to our immediate resistance of 2,619.60. In addition, the weekly RSI appears to face heavy resistance at 50. All these indicators suggest that bears are primed to take over the market. Weekly chart of SP Projected Move With all these bearish signals in front of us, bulls must now do everything they can to take back resistance of 2,619.60 in order to dissipate the growing bearish sentiment. Failure to do so would mean that the market has flipped 2,619.60 support into a firm resistance (S/R flip). This would send a strong message that bears are flexing their muscles. Should this happen, we expect SP to revisit lows of 2,317 where a technical bounce is likely to happen. However, this bounce will likely be weak and would not have the steam to go above 2,469. That S/R flip should be the final nail in SP’s coffin. Projected SP price action A break below 2,317 would ignite panic selling in the market. The next support below that level is 1,920. Interestingly, the 100 MA on the monthly chart is also crawling around that price area. This is the target for those who want to short the market once SP takes out support of 2,317. Bottom Line The S&P 500 futures may have recently bounced. However, all signs point to an even deeper correction. With bearish short-term and long-term setups, the market may be headed for more pain. 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. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (0 votes, average: 0.00 out of 5)You need to be a registered member to rate this. Loading... Kiril Nikolaev, CFA 3.8 stars on average, based on 308 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances. Follow @HackedCom Feedback or Requests? Continue Reading Analysis Crypto Update: Coins Retreat After Rally Attempt Published 5 hours ago on January 15, 2019 By Mate Cser While yesterday the major cryptocurrencies recovered their weekend losses and bounced back above their prior lows, the bounce got halted before changing the short-term technical setup. As the world is focused on today’s key Brexit vote, trading volumes are once again very low, but the lack of bullish follow-through is a warning sign for traders here even considering the low level of trading activity. We haven’t seen signs of a developing leadership in recent days, with correlations remaining high and with the top coins failing at the first major levels of resistance for now. That said, should the coins hold above yesterday’s lows and push above consolidation range, the formation of a bear-trap pattern is still possible even as odds still favor the continuation of the bear market. In light of the short- and long-term setups, traders and investors should still stay away from entering new positions, with our trend model still being on sell signals on both time frames for the majority of the top coins. BTC/USD, 4-Hour Chart Analysis While the breakdown in Bitcoin got bought yesterday, the bounce failed to reach the $3850 level and the most valuable coin is still hovering near the $3600 level, leaving both the neutral short-term, and of course, the long-term sell signal intact in our trend model. A move above $3850 would be a positive sign for bulls, but odds still favor a negative outcome and a likely test of the $3000 level in the coming weeks, so even short-term traders should still away from entering new positions here. Further, weaker support is found near $3250, with resistance ahead between $4000 and $4050, and near $4450. ETH/USD, 4-Hour Chart Analysis Although Ethereum briefly topped the $130 level after plunging below the $120 support, a failed breakdown pattern hasn’t been confirmed in the previously leading coin, and the short-term sell signal remains in place in our trend model. With the bearish long-term picture in mind, and with the oversold short-term momentum readings now cleared, the outlook for the coin remains negative, even as the resumption the counter-trend rally is still a possibility here. Further support below $120 is found between $95 and $100, while resistance is ahead at $160 and near $180. Altcoins Still Stuck in Downtrends Across the Board LTC/USD, 4-Hour Chart Analysis Litecoin’s rally stooped near the upper boundary of last week’s consolidation range, and although the coin is safely above the key $30-$30.50 support zone, the momentum of the bounce is waning. The bearish long-term forces still seem to be dominant, and the coin is well below the primary resistance level near $34.50, so our trend model remains on sell signals on both time-frames. Further strong resistance ahead near $38 and $44 and with support is found near $26 and $23. XRP/USDT, 4-Hour Chart Analysis Ripple experienced a brief period of relative stability after the weekend sell-off, but that didn’t change the bearish overall picture for the coin, and technicals are still hostile for bulls here. The coin continues to hover around the $0.32 price level, but we still expect a move below $0.30 in the coming weeks with a test of the bear market lows being the most likely scenario. Another strong support level is found near the $0.26 level, with resistance ahead near $0.3550, $0.3750, and in the key long-term zone between $0.42 and $0.46. XMR/USDT, 4-Hour Chart Analysis Monero is also among the weaker majors and although it bounced back together with the broader market, it failed to sustainably recapture the $45 level, and it remains in clear short- and long-term downtrend. Our trend model is o sell signals on both time-frames as well, and the re-test of the bear market low just below $38 seems very likely in the coming weeks. 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. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (3 votes, average: 4.67 out of 5)You need to be a registered member to rate this. Loading... Mate Cser 4.7 stars on average, based on 441 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. Follow @HackedCom Feedback or Requests? Continue Reading Top 3 Price Prediction Bitcoin, Ripple, Ethereum:... Ethereum Price Analysis: ETH/USD at Risk of Fast M... GBP Price Prediction: British Pound Jumps on Growi... ETH/USD Price Analysis: Ethereum’s “Thirdening” Ap... Bitcoin’s Price Recovery Stalls as BitMEX Shuts Do... Trade Recommendation: NEO Crypto Update: 5 Altcoins to Watch This Week Recent Posts Crypto Market Falls in Installments; Bitcoin and XRP In Lockstep; Small Alts Pump January 16, 2019 Tron Price Analysis: TRX/USD Looks Set to Give Up $0.02000 Territory Again January 16, 2019 U.S. Stocks Rise on News of China Stimulus; Theresa May’s Brexit Deal Falters in British Parliament January 15, 2019 Futures Update: Deeper Correction Looms for S&P 500 January 15, 2019 Crypto Update: Coins Retreat After Rally Attempt January 15, 2019 ETH/USD Price Analysis: Ethereum’s “Thirdening” Approaches January 15, 2019 Top 3 Price Prediction Bitcoin, Ripple, Ethereum: The pump doesn’t get any quality jump January 15, 2019 Oil Price Gets Support from China Stimulus Push January 15, 2019 Bitcoin’s Price Recovery Stalls as BitMEX Shuts Down U.S. Accounts January 15, 2019 EOS Price Analysis: EOS/USD Back in Unsettled Territory, as Price Runs into Sellers Again January 15, 2019 A part of CCN Hacked.com is Neutral and Unbiased Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com. Trending Altcoins1 week ago Will Ethereum Continue Rally Ahead Of Constantinople Hard Fork? Ethereum1 week ago Price Prediction: Ethereum Relaxes on Its Journey to Constantinople Bitcoin1 week ago Bitcoin Will Reach New Record High in 2019, XRP Could Compete with SWIFT: Weiss Ratings Cryptocurrencies1 week ago 2018 Crypto Crash: Here’s What Actually Caused It Altcoins1 week ago Holochain (HOT) Up 25% On Rising Volume and Positive Weiss Predictions Blockchain1 week ago Your Guide to Precious Metals on the Blockchain Altcoins1 week ago Cardano ADA Jumps 5% as Mainstream Attention Grows Altcoins6 days ago XRP Price Analysis: XRP/USD Explosive Breakout a Matter of Days?