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Bitcoin Price Deeply Discounted After ICE’s Bakkt Announcement

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The bitcoin price fell deeper into correction on Saturday, pushing the digital currency closer to bear-market territory as investors shrugged off a potentially game-changing announcement by Intercontinental Exchange.

BTC/USD Update

Bitcoin’s selloff intensified on Saturday, with prices hitting a low of $6,955.00 on Bitfinex. That was the lowest level in almost three weeks. The leading digital currency has since recovered to around $7,013, where it was down 5.5% from yesterday.

At current prices, bitcoin is capitalized at $120.7 billion, according to CoinMarketCap. Total trade volumes are worth $4.2 billion.

Since peaking above $8,500 last month, the bitcoin price has declined more than 17%. A fall to $6,800 would put BTC into bear-market territory, based on the generally agreed upon definition of the term.

As Hacked previously reported, bitcoin’s initial reversal was driven largely by technical re-positioning after prices entered overbought territory at the height of last month’s rally. On Friday, BTC crossed below the 100-day moving average, another bearish signal.

Bitcoin’s Fundamental Discount

Bitcoin’s latest breakdown came less than a day after Intercontinental Exchange (ICE) announced it was entering the cryptocurrency market with potentially game-changing implications. ICE, which operates 23 regulated exchanges including the New York Stock Exchange, is teaming up with some of America’s most iconic companies to bring bitcoin to mainstream circles.

Bakkt, the new startup that will hold and manage investors’ cryptocurrency, is looking to integrate bitcoin with the mobile shopping experience. At stake is roughly $25 trillion in fees currently doled out to credit cards and online shopping vendors.

Backed by Microsoft cloud services, Starbucks and a bevy of top investors, Bakkt aims to “build confidence in [cryptocurrencies] on a global scale,” according to Jeffrey Sprecher, ICE’s founder, chairman and CEO.

The market’s tepid reaction to the news suggests that technical forces are likely at play in keeping the bitcoin price rally under wraps. This is somewhat perplexing, given that murmurs of a potential crypto exchange-traded fund was partially responsible for bitcoin’s nearly 26% gain in July.

To be clear, Bakkt is scheduled to launch in November – pending regulatory approval. Given the market’s reaction, that timeline may be under scrutiny by investors who’ve grown accustomed with regulatory letdowns.

This isn’t the first time the bitcoin price has discounted  bullish fundamental news. As Hacked previously speculated, the mismatch between positive fundamental news and bitcoin’s performance largely stems from the absence of new traders in the market. While the shift to institutional custody is ongoing, it’ll be a while still before the big banks and hedge funds make the same type of noise as last year’s retail boom. In the meantime, there is plenty to be excited about if you are a bitcoin holder.

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 647 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Altcoins

Why Would Anyone Have Faith In Tether?

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I don’t want to get sued for slander so let me explain the reasoning beyond today’s title. After all of the turmoil surrounding Tether on Monday, how can the price be anywhere near the $1 parity level with the US dollar?  After more than a year, how can anyone have confidence in Tether and their common law partners Bitfinex when, for example, Circle, backed be the highly respected Wall Street giant Goldman Sachs offers an alternative?  We should also mention that Circle is just one of many so called stable coins.

It isn’t hard to find a list. Exchanges are feverishly adding stable coins. Singapore based Houbi is adding Paxos Standard Token (PAX), True USD (TUSD), Circle (USDC) and Gemini (GUSD).  

When Stable Coins Cause Instability

Well, the evidence is mounting as the months move along that so called stable coins can have the power of creating anything but stability.  This week’s experience with Tether, Bitfinex and the price explosion of Bitcoin demonstrates that there are still dangers lurking. This is why trust is important.

Monday’s gyrations were not the first questionable moment for Tether.  The coin, which gains its intended stability by being tied on a one for one basis with the US dollar, has been the subject of questionable behavior all year.  

As far back as January trade sources were expressing concern the Tether was responsible for last December’s major price bubble in Bitcoin.  The frenzy over Bitcoin set off speculation across the entire crypto spectrum. But that was just the beginning.

In June Bloomberg reported on a paper by John Griffin, a finance professor at the University of Texas, that among other things claimed 60% of last year’s price move in Bitcoin was the result of manipulation surrounding Bitfinex. That directly implicates Tether.

Using algorithms to analyze the blockchain data, Griffin’s team found that purchases with Tether were timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.

These findings prompted the US Commodity Futures Trading Commission to step in with a series of subpoenas.

Tether’s coins had become a popular substitute for dollars on cryptocurrency exchanges worldwide, and for good reason. They are anonymous, closely tied to the value of the US dollar and can be used in exchange for Bitcoin, Ether or about 10 other cryptocurrencies.  Tether is closely associated with Bitfinex, with whom they share common shareholders and management.

Bitfinex has offices in Hong Kong but it is legally headquartered in the British Virgin Islands. In May they announced plans to move to Zug, Switzerland. Bitfinex has a sorted history of poor security, having lost nearly $100 million worth of Bitcoin from customer accounts. Moreover, while claiming to have total one for one US dollar backing for each Tether, real proof is absent.  

Further Evidence of Manipulation

Over the course of this year, as we have gathered digitally to witness the loss of nearly $600 billion in crypto value, everyone has been looking for the culprit. When I first read of some of the academic studies that blamed the advent of futures trading on the CBOE, I laughed. Honestly, I believed the real cause of the rise and fall of crypto were a well connected group of billionaires that together had the power to move markets.  

Well the folks at Chainalysis have just produced some surprising research results. Their Blockchain Intelligence Platform powers investigation software for some of  the world’s top institutions. These guys don’t do surveys, the have their hands on big data that is able to detect some interesting stuff.

Chainalysis released a new report last week showing that the so called Bitcoin whales are not responsible for price volatility. The study examined the 32 largest BTC wallets, which reportedly represent 1 million BTC, or around $6.3 billion. That is a pretty solid sample size.

The data revealed that the BTC whales are do not act in concert with one another. In fact not only are they a diverse group but about two thirds behave like longer term investors. Instead of being FOMO (Fear Of Missing Out) types, on net they have traded against the heard buying on price weakness.

Putting The Pieces Together

The crypto world is bombarded with globally generated news on an hourly basis. But what does all of it mean anyway? Hopefully this article adds some perspective on what and who has been responsible for the direction of crypto prices over the past year.  As more of these weak players are identified and depleted of their business, real investors will have the confidence to return to the market.

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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4.4 stars on average, based on 113 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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Bitcoin

Bitcoin Price Maintains Premium on Bitfinex in Wake of USDT Fallout

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Bitcoin resumed its range-bound trading on Wednesday, though the premium paid for BTC on exchanges like Bitfinex remained elevated following the large-scale cash-out of USDT. The short-term outlook remains mixed with prices showing little signs of making new highs.

BTC/USD Update

The bitcoin price reached a high of $6,794 on Bitfinex, compared with an average peak of $6,616 for the broader market, according to CoinMarketCap. At the time of writing, BTC was valued at $6,712 on Bitfinex, having declined 0.6% from the previous day. That gives bitcoin a market capitalization of around $114 billion, which amounts to 53.9% of the overall market.

BitMEX, a popular crypto derivatives platform, has emerged as the biggest market for BTC in recent days. As of Wednesday, the exchange processed more than 17% of the digital currency’s transactions via BTC/USD. The second largest market based on overall volume was won-based transactions on Bithumb.

Overall, BTC remains locked in a falling trendline since July, which represents the last major peak in values. Since reaching a high above $8,400 on July 24, bitcoin has been in a state of perpetual decline, with downside pressure keeping prices locked below $6,800. At the same time, the market has established firm support near the psychologically significant $6,000 level. At this point, there’s little reason to believe that level is in jeopardy.

The cryptocurrency market was little changed on Wednesday as volumes hovered near $12 billion. At press time, the total market cap was valued at $210.4 billion. The market peaked above $221 billion earlier in the week as trade volumes more than doubled.

Bitcoin’s Hefty Premium

The largest digital currency by market cap is still trading at a premium on exchanges like Bitfinex, which facilitate large volumes of USDT trades. On Monday, bitcoin’s quoted price on Bitfinex was roughly $900 higher than other exchanges as investors pulled out of USDT, a controversial stablecoin that is used to buy leading digital currencies such as BTC. Since Monday, Tether has been trading well below the one-for-one dollar peg it usually claims. At press time, USDT was worth less than $0.98.

Bitcoin’s volatility index has risen this week, though largely remains near 17-month lows. As of Tuesday, bitcoin’s 30-day volatility tracked had risen to 1.98%, according to bitvol.info. The index fell to a low of 1.56% earlier this month.

Declining volatility is a marker of maturity and stability in the market. However, it has also made upside momentum more difficult to sustain. That’s because falling volatility is commonly associated with declining trade volumes. Bitcoin’s daily turnover surged past $7 billion at the beginning of the week but has since fallen back to the low $4 billion range.

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 647 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Crypto Update: Sideways Drift in Cryptoland

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Not much has changed in the past 24 hours in the cryptocurrency segment, with most of the majors experiencing light trading activity and low volumes following Monday’s spike.

Ripple stayed in the center of attention as the third largest coin has been drifting higher together with Stellar, outperforming the broader market. Despite the gains, XRP also remained clearly in Monday’s range, and the technical setup continues to be shaky even concerning the strongest digital currencies.

While Tether continues to trade with a discount, leading to a slight premium in the price of cryptos on several exchanges, volatility is very low in the markets. Although most of the top coins are slightly lower today, the small moves mean that the total value of the market is still near the $210 billion level, and Ripple is edging closer to Ethereum in market cap yet again.

XRP/USDT, 4-Hour Chart Analysis

Ripple is holding on above the key $0.42-$0.46 zone thanks to its relative strength, but the coin is still on a short-term sell signal in our trend model, as it failed to show real momentum since the surge that was fueled by the dislocation in Tether’s market. XRP still faces strong resistance levels near $0.51, $0.54, and $0.57, and until a move above the spike high, a new short-term uptrend is not confirmed and traders should still not enter new positions.

BTC/USD, 4-Hour Chart Analysis

Bitcoin failed to rally back above the primary resistance level at $6500, even as the coin stabilized well north of the $6275 level and its pre-surge price zone. With that in mind, the coin remained on a short-term sell signal, with a test of the $6000 support still being likely.

While the long-term setup is still neutral, and the long-term support zone near $5850 is fairly safe currently, given the overwhelmingly bearish long-term outlook in the segment, we continue to be defensive towards Bitcoin as well. Further resistance levels are ahead at $6750 near $7000, while below $5850 the next major support zone is found between $5000 and $5100.

Ethereum Holds Just Above $200 as Litecoin and Dash Continue to Lag

ETH/USD, 4-Hour Chart Analysis

With the exception of Ripple and Stellar, altcoins are leaning bearish today, with Ethereum still being the most important laggard of the segment. While ETH is trading above $200, it remains in bearish technical setups on both time-frames, and the recent days confirmed the weakness of the second largest coin again.

Traders and investors shouldn’t enter positions here, as a move towards the $170 bear market low is still likely in the coming period, with strong support level as also found near $180 and $160 and with resistance ahead near $235 and $260.

Dash/USD, 4-Hour Chart Analysis

Dash has been showing weakness throughout this month, and the coin is now likely headed back towards the key $150 level. A move below primary support would warn of a test of the bear market low near $130, while an unlikely move above $170 would signal a trend change. For now, Dash remains on sell signals on both time-frames, and trades should stay away from the coin.

LTC/USD, 4-Hour Chart Analysis

While Litecoin experienced an encouraging bounce in September, it is among the weaker major coins again, and the $51 support level is back in the spotlight. A move below that level is still likely even after the spike above $56 on Monday, since sellers are clearly in control of the currency’s market.

The next major support zone is found near $44, with the bear market low above that at $47, while further resistance is ahead near $59 and $64.

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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4.6 stars on average, based on 378 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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