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Bitcoin Resumes Lateral Trading as Lightning Network Gets New Use Case

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Bitcoin continued to trade in a narrow range on Tuesday, reflecting the overall mood of the market following a weekend consolidation. On a fundamental note, a recent breakthrough in Lightning Network capability is generating renewed optimism over bitcoin adoption in commercial and consumer circles.

BTC/USD Update

Bitcoin showed little upside on Tuesday, as prices hovered within an $80 range on Bitfinex. At press time, BTC was trading hands at $6,590, having lost roughly 0.2% on the day. The leading digital currency lacks momentum on the hourly chart, which means short-term traders can expect choppy conditions to persist.

On the daily chart, bitcoin can be seen testing the 50-day moving average, an important indicator of underlying price action. As the following chart demonstrates, BTC has made a series of lower lows going back to mid-August but has maintained a firm price floor near $6,000.

At current values, bitcoin has a total market cap of $113.8 billion. Daily trade volumes have fallen back below $4 billion, according to CoinMarketCap.

Despite failing to make progress in recent days, bitcoin’s overall market share has risen slightly. Bitcoin’s dominance rate – BTC’s share of the overall cryptocurrency market cap – reached a high of 52.2% on Friday. It has since fallen back to around 51.4%. Last week, the dominance rate approached 50%.

The combined value of all crypto assets, including bitcoin, is $221.3 billion.

Lightning Network Use Case

The growth and widespread adoption of Lightning Network could be the next major catalyst to spearhead bitcoin adoption. As Forbes reported on Tuesday, Spanish hardware hacker Ricardo Reis recently demonstrated how Lightning Network can be used to purchase Coca-Cola bottles from a vending machine.

In a 42-second video titled “Coke vending machine that accepts Bitcoin payments through Lightning Network,” Reis demonstrates how easy it is to pay for certain goods using the new infrastructure layer. While the vending machine is certainly modified, it does not diminish the ease of transaction. In the video, Reis purchases Coca-Cola through a built-in QR code facilitated by Lightning Network.

As Hacked reported back in July, the Lightning Network has reached 10,000 channels with a total channel value of 100 bitcoin – a major milestone in the quest for instant transactions. These channels enable two parties to deposit funds and exchange them in real time. The channel can remain open indefinitely to facilitate payments before being added to the blockchain.

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 642 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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  1. Pgaucher

    October 3, 2018 at 1:56 am

    The use case of a home made vending machine is hardly synonymous with adoption potential, unless a vending machine merchant starts accepting cryptocurrencies as payment method. The same vending machine could have accepted BCH or any other cryptocurrency. But all this is pointless.s unless merchants get on board.

    I would suggest HACKED starts reporting on projects aimed at gaining merchant adoption. This could go a long way in creating excitement to the space, and generate higher traffic to the site.
    Cheers.

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Bitcoin

Bitcoin Price Treads Water as Market Eyes Maturity

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Bitcoin’s price hovered within a narrow range on Sunday, as plunging trade volumes kept rally caps in check following a rocky end to the previous week.

BTC/USD Update

The bitcoin price fluctuated within a $70 range on Sunday, reaching a high of $6,3399.30 on Bitfinex. At the time of writing, BTC/USD was valued at $6,368 for a gain of 0.6%.

Narrow price action was accompanied by a sharp drop in trading volumes, with market turnover approaching the lowest level of the year. Over the last 24 hours, bitcoin’s trade volume on exchanges has declined by 25% to $3 billion, according to CoinMarketCap. That represents roughly one-third of total market turnover. BitMEX, a derivatives market, processed 16% on bitcoin’s trade volumes on Sunday. Bithumb saw nearly 5% of the daily turnover.

Since falling to the low $6,200 range on Thursday, bitcoin’s price has been slowly tracking upwards. A firm price bottom near $6,000 suggests that the path of least resistance is higher in the short term.

At current prices, bitcoin has a total capitalization of $109.2 billion, accounting for 54% of the entire market. The combined market value of all digital currencies is holding steady above $202 billion, based on latest available data.

Bitcoin Market Maturing

Despite the recent bout of selling pressure, bitcoin has established a fundamentally sound price floor and is exhibiting significantly less volatility than previous market cycles. This is not only corroborated by the bitcoin volatility index, which is currently tracking near yearly lows, but in earlier research published in a high-profile journal called Chaos: An Interdisciplinary Journal of Nonlinear Science.

In a study titled “Bitcoin market route to maturity? Evidence from return fluctuations, temporal correlations, and multiscaling effects,” Polish researchers examined bitcoin’s price action over a six-year period. Although they spotted irregularities early on, the researchers concluded that bitcoin’s “rates of return fluctuated according to the inverse cubic law,” which is a method of analyzing a market’s maturity. This means cryptoassets like bitcoin are increasingly behaving like mature markets such as stocks, commodities and fiat currency.

Bitcoin’s maturity was “particularly evident in the last six months of the examined period” between November 2017 and April 2018. As Hacked previously reported, the launch of bitcoin futures last December has had a stabilizing impact on the market despite arguments to the contrary by the Atlanta Federal Reserve and others.

Against this backdrop, it is reasonable to assume that bitcoin’s price action will show a greater tendency of following established technical patterns now that the market has a longer historical precedent. While this could mean lower prices for longer, a maturing and stabilizing market is positive in the long run.

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 642 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

Crypto Markets Stabilize in Low-Volume Trade; World Bank President Hails Blockchain

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Cryptocurrency prices were little changed on Saturday, as investors shifted to the sidelines following a brisk technical selloff that knocked $20 billion off market values.

Market Update

The combined value of all cryptocurrencies in circulation continues to hover near $202 billion, according to CoinMarketCap. Values plummeted more than $20 billion last week to a low of $196.9 billion. The selloff had no apparent fundamental drivers, a sign that technical re-positioning was the likely culprit.

Bitcoin was down 0.4% compared with 24 hours ago to trade at $6,278. The leading digital currency plunged more than 6% on Thursday to reach new three-week lows. As the author previously noted, bitcoin usually declines heavily in the ten days before the CBOE XBT futures expiry. The current contract is set to expire Oct. 17.

In terms of other major assets, Ethereum edged up 0.7% to $199 on Saturday after declining sharply in the latter half of the week. Bitcoin cash, EOS and Stellar XLM were little changed.

Tepid price action was accompanied by a sharp drop in trade volumes. Total market turnover on digital currency exchanges plunged 30% compared with Friday, with the top-three exchanges recording declines of at least 28%.

In terms of adjusted volume, Bitfinex has fallen out of the top-five exchanges and into the no. 14 spot after the exchange temporarily halted fiat deposits. The company issued a statement informing traders that the issue would be resolved within the week. It failed to provide any reason for the abrupt closing of fiat deposits.

World Bank’s Positive Take on Blockchain

World Bank President Jim Yong Kim believes blockchain technology has “huge potential” to transform the banking system. Speaking at the IMF World Bank’s annual meeting in Bali, Indonesia on Thursday, Kim acknowledged there are innovations in technology that can help traditional finance “leapfrog generations of bad practice, generations that would take forever in terms of reducing corruption.”

The World Bank issued the first blockchain bond in August – a practice that involved, creating, allocating and managing the entire bond issuance process through distributed ledger technology. ‘Bond-i,’ which stands for Blockchain Operated New Debt Instrument, was administered in Australia and raised more than $80 million.

As Hacked reported two weeks ago, Austria became the first country to issue government bonds on the Ethereum network. A total of  €1.15 billion worth of bonds was issued in the first week of October, according to local news agency Kleine Zeitung.

Blockchain technology is not only boosting transparency, it is helping organizations reduce costs and paperwork. These efficiency gains are likely to spearhead wider adoption of distributed ledger technology within banking and government circles despite existing apprehension over cryptocurrencies.

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 642 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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Bitcoin

After Plunging with Broader Markets, Bitcoin Price Regains Footing Above $6,300

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Bitcoin experienced a quick and painful pullback on Thursday, as the leading digital currency failed to assert itself as an alternative safe haven following a series of massive selloffs on Wall Street and in global markets. That said, BTC appears to have regained its footing after successfully defending a key technical and psychological support.

BTC/USD Update

After falling to the low $6,200 range on Thursday, the bitcoin price has rebounded to $6,310 on Bitfinex. That represents a 24-hour gain of 0.9%. The leading digital currency touched an intraday high of $6,353.40.

Bitcoin was down more than 6% at its lowest point Thursday but continued to defend the critical $6,000 support. This region has proven time and time again to be the minimum threshold market participants are willing to accept for BTC.

After peaking at $5 billion on Thursday, overall trade volumes in BTC is back down to around $4.1 billion, according to CoinMarketCap. At current values, bitcoin has a total capitalization of $108.9 billion.

Digital Gold?

The yearlong downturn in crypto prices has bitcoin struggling to live up to its status as ‘digital gold’ even as global stock prices tank. Over the last two days, the Dow Jones Industrial Average has sold off 1,378 points to reach its lowest level in over three months. On Wednesday, Wall Street recorded its worst single-day drop since February.

Asian markets have experienced even bigger losses, with Chinese stocks falling to their lowest in two-and-a-half years. The global selloff has pushed the price of gold back above $1,200, as traditional haven plays attracted new buyers.

To be sure, bitcoin’s moves are not correlated with the broader market and the two-day plunge in equities are not responsible for the sudden collapse in BTC. Bitcoin’s ability to move independently of the broader market is one of its most attractive features as a safe haven. It means that investors can hold BTC and not worry about its price being influenced by things like monetary policy, economic data, bond yields or Wall Street speculation.

While bitcoin has been unable to demonstrate its safe haven appeal to new buyers amid the market downturn, the digital currency remains a trusted store of value at a time when developers are looking to scale its use in the payments arena. At the same time, being ‘non-correlated’ does not equate to ‘inverse correlation,’ which means investors shouldn’t expect bitcoin to rise just because the stock market is falling or vice versa.

There was no fundamental catalyst behind bitcoin’s decline on Thursday, which means technical re-positioning and prevailing sentiment continue to drive market prices lower. At the same time, bitcoin typically falls into expiration of the CBOE XBT futures contract, which makes price action especially volatile ahead of the close. As Fundstrat’s Tom Lee pointed out, “overall, bitcoin has fallen 18% in the ten days prior to CBOE contract expiration.”

Trading in the current XBT contract expires Oct. 17.

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:

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4.6 stars on average, based on 642 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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