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Bitcoin Market Share at 52% as Hard Fork Looms

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Bitcoin rose briskly on Monday, bringing its total market share above 50% as investors eyed an upcoming hard fork of the world’s leading blockchain.

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Another Fork in the Road

The latest uptick in bitcoin partly reflects investors positioning themselves to capitalize on an upcoming fork in the blockchain. On Oct. 25, a group of cryptocurrency miners plan to fork the Bitcoin blockchain network, creating a new algorithm called Bitcoin Gold (BTG). Investors who own BTC before the fork will receive an equivalent amount of Bitcoin Gold after the chain split. This is an attractive bet for those of us already bullish on bitcoin.

The BTG developers plan to open a trading exchange by Nov. 1.  The goal of BTG is the same as any hard fork – namely, to improve the protocol. By forking from the current software branch and introducing a new version, Bitcoin Gold is taking aim at the current challenges facing the mining community.

The Bitcoin Gold project is being led by Jack Liao, who heads the Hong Kong-based mining firm LightningASIC.

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Of course, whether or not exchanges support the newly minted currency is an entirely different question. Not all platforms were keen on supporting Bitcoin Cash (BTH) following the Aug. 1 fork. Coinbase was the most prominent example. The leading cryptocurrency exchange eventually made BTH available after its customers threatened to sue.

“We are planning to have support for Bitcoin Cash by 1 January 2018, assuming no additional risks emerge during that time,” Coinbase announced back in August.

If recent history is any indication, it could be a rocky road ahead for investors looking to sink their teeth into Bitcoin Gold.

Bitcoin Rallies

The BTC/USD rose 3% against the dollar on Monday, reaching a high of $4,741.50, according to Bitstamp. Prices are in a firm upward trajectory, with $5,000 looking more like a possibility.

At present values, bitcoin owns roughly 52% of the $151 billion cryptocurrency market. The latest uptick in prices has discounted several leading altcoins, a sign that investors are looking to capitalize on the upcoming split

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Bitcoin

Bitcoin Returns to Health After Flash Crash

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The value of bitcoin stabilized Thursday after a flash crash wiped nearly 9% from its value, a sign that investors are getting over the initial fear of regulatory encroachment on their tokens.

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Bitcoin’s Epic Drop

Beginning at around 12:45 UTC, the BTC/USD began an epic decline that continued for 90 minutes until prices bottomed in the low $5,100 region. At its worst, bitcoin was down nearly 9% on the day.

Prices would soon recover, and do so in a big way. BTC/USD regained more than $300 over the next two hours before continuing higher for the rest of the day. At press time, bitcoin is up 1.3% at $5,646, having traded within a $180 range early Thursday.

At present values, bitcoin is capitalized at $94 billion, according to CoinMarketCap. The token peaked above $97 billion last week as it set multiple record highs.

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Bitcoin continues to trade in overbought territory, according to the Relative Strength Index (RSI). As the following chart illustrates, the BTC/USD has been technically overbought on several occasions over the past six months.

As CCN reports, bitcoin wasn’t the only digital currency to experience a sharp drop. Ripple plunged by 12% and Ethereum shed 8%. For bitcoin and ether, the losses would later prove to be a healthy correction after last week’s run-up. The ETH/USD is currently trading around $314.

Ripple is still down roughly 9%, where it is trading near three-week lows.

Bitcoin, ether and Ripple are the world’s top-three digital currencies by market cap. Combined, they’re worth more than $131 billion.

Regulatory Fears Emerge

The plunge came just a day after the U.S. Commodity Futures Trading Commission said it has jurisdiction to regulate bitcoin derivatives. In a report titled A CFTC Primer on Virtual Currencies, analysts at the Commission reaffirmed that bitcoin and others like it are commodities.

The report said:

The CFTC’s jurisdiction is implicated when a virtual currency is used in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce.

A commodity is defined in various ways by the CFTC. It can be a physical commodity or natural resource, a currency or interest rate and “services, rights, and interests… in which contracts for future delivery are presently or in the future dealt in.”

Three bitcoin exchanges were listed as examples of permitted cryptocurrency activity. They included TeraExchange, LLC, North American Derivatives Inc. (NADEX) and LedgerX, LLC.

The report also said there was no inconsistency between how it defines cryptocurrency and how the Securities and Exchange Commission (SEC) dealt with The DAO. SEC regulators deemed The DAO tokens to be “securities” under federal law.

There is no inconsistency between the SEC’s analysis and the CFTC’s determination that virtual currencies are commodities and that virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances. (CFTC)

As cryptocurrency trading expands in scope, investors can expect a slew of products designed to track the market. The Chicago Board Options Exchange (CBOE) plans to launch its own bitcoin derivatives product next year.

Meanwhile, Grayscale currently operates the Bitcoin Investment Trust, a traditional investment vehicle with shares solely invested in BTC.

Featured image courtesy of Shutterstock. 

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Technical Analysis: Bitcoin Dumps and Pumps amid Broad Volatile Correction

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The crypto segment has been in turmoil today, as the most valuable coins turned significantly lower, leading to a mini-panic, but they rallied strongly off their slows as buyers stepped in the second half of the session.

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Bitcoin fell as low as $5100, for a 15% correction top-to-bottom, but it is now trading near the prior short-term support at $5400. As the long-term picture remains overbought, investors shouldn’t open new positions here, but traders could play a likely move towards the $6000 level, although we still advise small sizes, as correction risks remain elevated.

BTC/USD, 4-Hour Chart Analysis

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The other majors were also declining in early trading, led by Ripple, with only NEO and IOTA, holding up well during the sell-off.  Both of the latter coins faded away as the rest of the market recovered, but Ripple continued to suffer. For now, the long-term bullish picture is unchanged for the segment, but BTC’s overbought correction could still cause volatility in the coming period. Let’s see the short-term charts after the busy session.

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Bitcoin

Money Leads to More Money – Power to More Power

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Every 5 years the Central People’s Government of China has a grand political event to reshuffle the distribution of power in the world’s most populated country.

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In today’s 19th National Congress the most powerful man in the world just became even more powerful. President Xi delivered an eloquent three hour speech stressing the importance of globalization and China’s role of leadership going into the future.

The reaction from financial markets in Asia was rather muted given the recent gains in global markets.

@MatiGreenspan
eToro, Senior Market Analyst

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Please note: All data, figures & graphs are valid as of October 18th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

A brand new record high for the Dow Jones and a huge milestone of 23,000 points. The index is now up approximately 25% since Donald Trump was elected last November!!

Though Donald Trump might make a comment or tweet on this fact later today the rally may not be entirely Trump related.

Correlation does not equal causation!!

The Trump election did indeed wake the markets from a deep slumber that it was in with little movement between 2014 and 2016. However, if we zoom out and take a look, we’ll see that since the bottom of the market after the crash of 2008 we’re up 228%.

Many analysts agree that earnings ratios are at their peak yet investor sentiment remains extremely bullish on stocks.

Why are stocks going up?

The reasons are simple. First, there’s still plenty of cash ready for investment left over from the central bank injections over the past decade. Rates for borrowing money are still very cheap, which allows investment firms to borrow money easily and put it in the stocks.

Furthermore, any portfolio manager currently sitting on the sidelines is getting squashed. Try explaining to your clients that you missed out on a 25% rally because you think the markets are overvalued and watch them leave and go to a competitor.

This circle can indeed go on for a while as money does have a tendency to lead to more money.

In this cycle particularly, due to the ample assistance from the central banks, I’m not even certain that historic PE ratios are even a factor.

Bitcoin Volumes

The Crypto Market is pulling back a bit. After the incredible highs we saw over the weekend it only makes sense.

Specifically regarding bitcoin, we need to understand where the excitement and the action are coming from. Sure, many people are fed up with government backed money and I do believe that the financial revolution is well underway. But besides grandiose ideology, there is one country that stands above the rest as far as bitcoin adoption.

According to an article in bitcoin.com 60% of all volume on bitcoin is coming from Japan, with an additional 25% coming from the USA and 9% from South Korea.

Well, that makes sense. After legalizing bitcoin as a currency in April, Japanese vendors and businesses are adopting it at an incredible rate.

We continue to watch other interesting countries that seem to be on the verge of this type of adoption particularly Russia, Australia, and hopefully someday soon, India.

Many thanks to a local band that I’m fond of for the title of today’s update. And many thanks to everyone who continues to send me your comments, feedback, and relevant articles. Keep tagging me!!

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.

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