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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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4.5 stars on average, based on 143 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

Technical Analysis: Cryptocurrencies Show Strength amid Slight Correction

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The crypto segment is trading in a short-term correction, or rather consolidation pattern today, as bullish signs continue to dominate the landscape, despite the pause in the surge. The largest coins are mostly down by a few percent from the overnight highs, but the momentum of the move is not substantial, for now, and several currencies are showing relative strength.

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Bitcoin is hovering around the key $10,000 level after hitting an overnight high above $10,300, with the short-term MACD indicator showing the possibility of a short-term correction. With that in mind, investors and traders should wait for a dip before entering new positions, even as further gains are possible. The next key resistance level is at $11,300 with further strong levels ahead at $13,000, and $14,250, while the line-in-the-sand support is still found between $9000 and $9200.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin Cash, Litecoin, NEO, and Ethereum Classic are all among the stronger coins, while Ethereum is also holding up well amid the weak pullback in BTC. The price of the ETH token has been very stable today after a period of underperformance, and it is still trading well below the next resistance level at $1000, but also significantly above the key support near $850.

We still expect the currency to consolidate more before a clear move out of the downtrend, but investors could still use the dips to boost their holdings. Further support levels are found at $740, $625, and $575, with resistance above $1000 ahead at $1175.

ETH/USD, 4-Hour Chart Analysis

(more…)

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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Analysis

Crypto Update: Coins Enter Shallow Correction

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The segment experienced a rush of optimism yesterday, as Bitcoin’s price pushed over $10,000, Litecoin, the undoubted leader of the rally hit an intraday high at $235, and the other relatively strong coins like Monero, Dash, and IOTA also shined.

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Ethereum Classic, the early leader continued its short-term correction, while the slightly lagging currencies, most notably Ethereum and Ripple, registered modest gains.

Most of the majors got slightly overbought from a short-term technical perspective, and it’s no surprise that the rally halted, especially given the strong resistance zone in the current area following the heavy selling of the last several weeks. The coming pull-back will be a crucial one, as, after the higher swing highs, the coins should form higher swing lows as well, to establish short-term uptrends.

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BTC/USD, 4-Hour Chart Analysis

Bitcoin hit an overnight high near $10,300 before the consolidation began, but it’s still trading well above the key $9000-$9200 support zone that could be in focus during the short-term correction. Resistance levels above $10,000 are at $11,300 and $13,000 while further support is between $7650 and $7850.

 

XMR/USDT, 4-Hour Chart Analysis

Monero, which has been among the first majors to break the dominant declining trendline touched the $300 level, before turning lower overnight, and it remains in a good technical position to form a new uptrend. The coin is trading right at the $280 support level, with further levels at $240 and between $200 and $215.

Look Out for Signs Rotation During the Consolidation

XRP/USDT, 4-Hour Chart Analysis

As the segment is still acting bullish, with low correlation and volatility and positive volume patterns, the rotation between the coins will likely continue. That could mean that the currently lagging coins might have their moment in the sun in the coming period, so traders should watch Ripple, ETC, ETH, NEO, and Stellar for signs of early strength, even as ETH and NEO are still expected to continue their broader correction.

As the weekend is shaping up to be an exciting one for investors looking for re-entry points, stay tuned for our detailed technical analysis later in today.

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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Analysis

Technical Analysis: Bitcoin Tops $10,000

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The cryptocurrency market continued to heal considerably, as the major coins keep on successfully tackling resistance levels following a very deep sell-off that shaved off more than 60% of the market value of the segment.

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The sector is now back near the $500 billion mark in market capitalization, but investors shouldn’t get complacent here, as corrections will come along the rally, and the dominant downtrend is intact in most cases, with BTC being no exception.

With that in mind, today might not be the best time to open new positions, even as BTC could still get to the next resistance level at $11,300 before a pull-back. Further strong levels are ahead at $13,000, and $14,250, while the line-in-the-sand support is still found between $9000 and $9200.

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BTC/USD, 4-Hour Chart Analysis

Monero is one of the strongest majors from a technical perspective, as it already broke its declining trend, pushed to a higher high, and it is in the process of establishing a new uptrend. That said, strong resistance is found right at the current levels and near $300, and short-term momentum is headed towards overbought territory. Investors and traders could still be looking for entry points on the short-term corrections, with support levels at $240 and $215.

XMR/USD, 4-Hour Chart Analysis

(more…)

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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